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Survey Report

Insurance Marketplace Realities 2021 – Terrorism and political violence

Credit, Political Risk and Terrorism

November 18, 2020

Increased civil unrest driven by political and ideological polarization puts property coverages under scrutiny.

Rate predictions

Rate predictions: Terrorism and political violence
  Trend Range
Terrorism and political violence Neutral increase (flat yellow line, arrow pointing up) Flat to +5%

Key takeaway

Increased civil unrest driven by political and ideological polarization puts property coverages under scrutiny.

Property insurers are signaling a narrowing of coverage following widespread damage caused by strikes, riots and civil commotion, which we expect to increase as the lasting impacts of COVID-19 are felt across the world.

  • With lines between domestic terrorism and civil unrest blurring, we urge a careful analysis of in-force policies. Language in property and casualty policies excluding certain acts of a political, ideological or religious nature may serve to remove coverage for some of the threats frequently faced by insureds today, possibly pointing to a need to consider filling the gaps with terrorism and political violence insurance.
  • Confronted with increasing business interruption losses without an accompanying physical damage component, risk managers should ensure that they understand what their programs cover and what they may not.

In response to an unfortunate trend, active shooter policies join the mainstream.

  • Most terrorism enquiries now contain requests for active shooter coverage, which can often be housed economically within a traditional terrorism program to maximize available capacity.
  • Having evolved from a means to plug potential gaps in traditional P&C policies, the latest products provide innovative, modular coverages that can be tailored to complement an insured’s risk management program, covering crisis management, pre-litigation victim care, comprehensive business continuity expenses and even preventative consultancy and training.
  • As these attacks become more prevalent, risk managers face expanded duty of care requirements and look to these products to fulfill them.

Analytics provide assurance on coverage levels.

  • The August 2020 Beirut explosion, while not an act of terrorism, highlights the importance of applying modeling techniques to estimate the impact of blasts. Recent developments in deterministic analytics help estimate the possible intensity and scale of terrorist attacks.
  • Risk managers should consider analytics a key tool in defining accurate risk concentrations and highlighting proximity to probable targets.
  • While the terrorism market’s hardening continues to be relatively gradual compared to other lines, a quantitative assessment of potential property damage, human vulnerability and operational disruption post event is nonetheless a crucial component in arriving at smarter purchase decisions.

Captives as a risk transfer option are seeing a resurgence following the renewal of TRIA.

  • With the Terrorism Risk Insurance Act (TRIA) extended until 2027, we have seen a resurgence in captive deployment as organizations access the broad scope of coverage afforded by the backstop.
  • In a market where premium is capacity driven, the flexible rating mechanisms permitted within a captive structure allow exposures to be priced for risk exposure and divorced from unrelated perils — generating significant cost savings for many clients.


Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. 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 advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.


Senior Director, Terrorism and Political Violence,
Financial Solutions

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