Terrorism risks in property insurance and their insurability after 11 September 2001
This publication is not a paper on terrorism as such. No attempt is made to explain the reasoning behind the phenomenon or to discuss effective ways of eradicating it. The issue concerns the possible consequences of terrorism, ie terrorism risks.
The first section comprises a systematic application of risk management principles and, accordingly, examines the spectre of terrorism and points to how terrorism risks can be identified, assessed and handled by insurers and reinsurers.
The second section is concerned with risk transfer; it deals with aspects of the insurability and reinsurability of terrorism in property and business interruption insurance. In this context, it must be remembered that 11 September 2001 brought an entirely new dimension to terrorism risk: it had previously been insured automatically as part of property insurance. The event prompted the need to re-examine the issue of insurability, a subject which had already been broached in the 1990s.
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