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Survey Report

Insurance Marketplace Realities 2020 Spring update – Terrorism and political violence

Credit, Political Risk and Terrorism
COVID 19 Coronavirus

May 7, 2020

Terrorism and political violence insurance may provide calm in an otherwise stormy marketplace.
Rate predictions
  Trend Range
Terrorism and political violence Neutral increase decrease (arrow pointing down, flat yellow line, arrow pointing up) -5% to +5%

Key takeaway

Terrorism and political violence insurance may provide calm in an otherwise stormy marketplace. Risk managers should be ready to investigate the potential benefits of rate stability and innovative product design.

TRIA is reauthorized, keeping federal support in place.

  • A full seven-year reauthorization of the Terrorism Risk Insurance Act (TRIA) in the U.S. will keep the program unchanged through 2027. It continues to provide a backstop to insurers for claims from acts of terrorism under all commercial property and casualty policies.
  • The legislation calls for review of the program’s scope, including an analysis of the availability and affordability of coverage for places of worship and a report on cyber terrorism.
  • Vital to ensuring the continued financial capacity and availability of comprehensive terrorism risk insurance, TRIA helps make coverage accessible and affordable for commercial policyholders.

The marketplace is mostly stable; while cautious and contracting slightly in places, captives are offering alternative solutions.

  • The total market capacity for terrorism and political violence risks is expected to decline slightly in 2020 due to M&A activity. New entrants are taking a cautious approach in deploying capacity to emerging market risks due to recent market losses.
  • Events in Chile and Hong Kong have focused attention on political violence risk in various global markets, with an emphasis on understanding underlying socio-economic issues.
  • With the long-term continuation of TRIA secured, the use of captive insurance companies has reemerged as a cost-effective, alternative solution for terrorism risk transfer, allowing access to virtually unlimited coverage.

Global instability and terrorism/political violence risks are increasing from emerging sources.

  • The COVID-19 pandemic has increased the risk of violence and social unrest. With law enforcement stretched thin and the continuation of a tense global political climate, organizations both public and private need to understand how violence could impact their operations — from a business interruption, crisis management and physical damage perspective. The global reach of the outbreak has presented companies with increased security exposures in terms of:
    • A workforce mandated to work remotely: Vacated properties may not be adequately secured or maintained.
    • Outbreaks of violence globally: As financial stress creates a ticking time bomb for the disenfranchised, incidents have arisen where security forces are deployed elsewhere or are afraid to act.
    • Potential for terrorist activity resurgence: The crisis may be used as a cover for terrorist mobilization.
    • Biological warfare has resurfaced as a viable method of attack, particularly as the inadequacy of the global response has been revealed.
    • Domestic violence and shootings are on the increase. Confinement is leading to a breaking point with individuals already unbalanced or marginalized.
    • Targeting of specific demographics: Anti-Asian sentiment, etc.
  • While the U.S. still faces threats from Islamic extremists, the rise of the militant far right in the U.S. and abroad has seriously expanded the threat of terrorism.
  • The outbreak of violence in historically peaceful territories has been aggravated by the global reach of social media employed with increasing success to organize and manage seemingly leaderless public protests.
  • Mass shootings in schools, private businesses and public settings increasingly threaten the safety and security of people and organizations across the U.S.


Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates. COVID-19 is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information.

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