| Trend | Range | |
|---|---|---|
| Terrorism and sabotage | ||
| Non-volatile territories |  |
+10% to +20% |
| Some volatility and/or isolated events | |
+20% to +30% |
| Major volatility and/or widespread risk of major incidents | |
+30% to +40% |
| Political violence | ||
| Non-volatile territories | |
+20% to +30% |
| Some volatility and/or isolated events | |
+30% to +50% |
| Major volatility and/or widespread risk of major incidents | |
+50% or higher |
Current political/economic conditions and conflicts around the globe are helping drive up pricing for political violence and terrorism insurance.
The crisis in Ukraine has added another dynamic to a marketplace already in turmoil from the lingering effects of the pandemic and global economic instability
- Lloyd’s is bracing for losses in Ukraine, which could ultimately exceed $3 billion.
- The global interconnection of the risk environment can lead to protracted losses in multiple-asset classes worldwide.
- Facing significant losses, reinsurers are signaling significant cost increases/reduced capacity for the class at upcoming account renewals.
Increasing global political polarization continues to provoke civil unrest and possible resurgence of terrorism.
- Large-scale political shifts are fuel for social discord. Major civil disturbances have occurred in more than 25 countries in the past 36 months, causing significant physical and human loss.
- While the marketplace has remained relatively static in terms of capacity, many insurers are reducing per-risk deployed capacity, and prices are expected to increase significantly due to these events and the expected reinsurance impacts.
A new generation of crisis analytics is being deployed to paint a clearer picture of potential human and financial consequences of terrorism and political violence.
- Risk aggregation models can calculate precise aggregate accumulations and point the way to operational and structural changes to reduce vulnerabilities.
- Global risk analytics can now generate risk scoring for any point on the planet to provide a holistic view of a company’s global risk profile and provide warnings about changing risk environments.
The deployment of captive insurance vehicles continues to provide access to otherwise unavailable or uncompetitive capacity for terrorism risk.
- Recent clarifications of the Terrorism Risk Insurance Program (TRIP) legislation have enabled access to physical damage coverage due to a cyber terrorism event.
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.
Disclaimer
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 entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
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