| Trend | Range | |
|---|---|---|
| Terrorism and sabotage | ||
| Non-volatile territories |  |
Flat to +10% |
| Volatile territories |  |
+10% to +25% |
| Political violence | ||
| Non-volatile territories | |
Flat to +15% |
| Volatile territories | |
+15% to +30% |
| Active assailant | ||
| Excluding liability | |
+5% to +10% |
| Including liability | |
+7.5% to +20% |
Key takeaway: The terrorism & political violence market has seen some easing from the larger rate increases of 2023, though insurers are very cautious of 2024, given this is the year of elections and the heightened possibility of a wider conflict in the Middle East.
Multiple geopolitical and socio-economic concerns are on the risk radar for insurers — Taiwan Cross-Strait relations, potential global or regional recessions, global energy crisis and increasing social inequality gap. Pricing reaction to conflict in the Middle East is currently localized, but dramatic escalation in the future could reverse improvements in rate hardening, reigniting larger rate increases globally, especially policies with political violence coverage.
Rate increases are tempering compared to late 2023, but insurers are still looking to rebalance their books to combat increased losses and treaty costs
- Re-pricing focus remains on minimum rate requirements for capacity and aggregate exposures, especially on excess political violence layers.
- Many subsequent renewals post-initial 2022 and early 2023 are hardening, seeing lower increases than in the prior year, with market competition and insurer retention goals helping drive this.
- Treaty reinsurers have mandated large-scale reductions in political violence exposure in the Middle East and neighboring countries, concerned with a regional escalation.
- The potential for reactive pricing to quickly jump throughout the year remains, due to varied and ever-changing security risk environments. Equally, there may also be some reductions later in the year if current countries of concern do not see major incidents or unrest after elections.
- Some insurers are considering automatic termination clauses on certain risks due to escalation of events in the Middle East.
Insurers are still reviewing coverage, with a focus on reducing non-physical damage business interruption and contingent exposure
- Insurers continue to push direct, indirect or blanket territorial exclusions for Russia, Belarus, Ukraine and Moldova. However, they have generally agreed to remove when not applicable.
- There is a reduced appetite for denial of access, contingent business interruption and automatic or miscellaneous coverage extensions as insurers push to improve exposure monitoring, strongly driven by treaty restrictions imposed on them and continuing into 2024.
- Specific business interruption waiting periods are returning, as well as increasing deductibles in volatile territories and higher risk occupancies.
- Valuations require inflationary consideration — policies without margin clauses and incorrect declaration penalties are under increased scrutiny.
- Appetite for multi-year policy periods is limited.
Active assailant rates are generally unaffected by terrorism and political violence market dynamics but are increasing in response to the change in risk environment, albeit slower than in 2023
- There is reduced appetite and larger rate increases for programs that include legal liability coverage.
- For residential programs, the market is limited by the lack of appetite from insurers, especially when requested to provide legal liability coverage.
- California signed into law SB553 requiring most California employers to implement a comprehensive workplace violence prevention plan by July 1, 2024, with the potential for other states to follow suit, triggering an increase in interest in consultancy and insurance solutions to support this change.
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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