New York, NY -(BusinessWire)- A new report recently released by Marsh confirms that demand for terrorism insurance remains strong and the existence of the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) plays a key role in making coverage available and affordable. The report’s findings were presented at a roundtable discussion at the US Capitol, which brought together industry experts, clients, and policy makers. The event was jointly sponsored by Marsh & McLennan Companies and the Coalition to Insure Against Terrorism.
According to Marsh’s 2014 Terrorism Risk Insurance Report, the number of companies purchasing terrorism insurance has remained constant — in the mid-60% range — since 2009 and pricing has also generally remained stable. Uncertainty over TRIPRA’s pending expiration at the end of the year, however, is currently impacting the availability and price of terrorism coverage in the US, especially as it relates to workers’ compensation.
“We believe TRIA is a model public-private partnership. Marsh’s new report confirms there is strong, long-term demand for the insurance it backstops with more than six out of 10 companies in the survey purchasing coverage,” said Dan Glaser, President and CEO of Marsh & McLennan Companies, who hosted the roundtable discussion. “The existence of the federal program plays a major part in the availability and affordability of the coverage.”
While recent congressional activity suggests the law will likely be extended, when and with what types of modifications remains a question. Marsh notes in its report that the Boston Marathon bombings highlight the need for a reauthorization bill to include a streamlined TRIPRA certification process that clarifies what type of event would be certified as a terrorism event and the timeframe for certification after an event occurs. The bombing also illustrates the need for TRIPRA to cover terrorism events that do not meet the Act’s certification thresholds.
“The recent introduction of a bi-partisan bill to reauthorize TRIPRA is an encouraging step in the right direction,” said Duncan Ellis, Marsh’s US Property Practice leader, who also spoke at the roundtable. “Everyday clients are calling us with concerns over market volatility and pricing. We look forward to the reauthorization of this important federal backstop for another seven years and working with clients to ensure they have the right coverage to protect their assets.”
Key findings from the report also include:
- In 2013, the percentage of Marsh clients purchasing terrorism coverage was 62%, unchanged from 2012.
- Education organizations purchased property terrorism insurance at a higher rate, 81%, than did those in any other industry segment in 2013. Health care organizations, financial institutions, and media companies had the next highest take-up rates among the 17 industry segments surveyed, all more than 70%.
- Massachusetts had the highest property terrorism insurance take-up rates (84%) among all states in 2013, followed by Maryland at 81%. Hawaii had the lowest take-up rate, at 36%.
- Median rates for companies with total insured value (TIV) of less than $100 million rose slightly in 2013 to $51 per million from $49 per million of TIV, while median rates for companies with TIVs of more than $1 billion, fell slightly to $18 per million from $19 per million in 2013.
- Construction companies paid the most for terrorism insurance in 2013, a median rate of $66 per million TIV, followed by power and utility companies, which paid a median rate of $48 per million of TIV.
- Health care companies paid the least for terrorism insurance in 2013, a median rate of $14 per million of TIV, following by education and manufacturing companies, which each paid a median $17 per million of TIV.