The report was released by Marsh & McLennan Companies during a meeting to draw attention to the impending sunset of TRIA.
MMC and the Coalition to Insure Against Terrorism sponsored an event in Washington, D.C., as Congress considers legislation to extend the federal government's terrorism backstop program. Participants said the demand for terrorism risk insurance remains strong.
"The absence of or a serious modification of the Terrorism Risk Insurance Program Reauthorization Act could affect the state-regulated workers' compensation market, especially in the areas of pricing and capacity," according to a summary of the report. "Workers' Compensation insurers are not permitted to exclude terrorism from their policies and insurers generally are concerned about potential aggregation of risk, which may impact the availability of workers' compensation insurance should TRIPRA materially change or expire."
The number of companies purchasing property terrorism coverage has remained fairly constant -- in the low 60 percent range since 2009, according to the report. Premium rates have also remained generally steady for the coverage.
But the elimination or substantial change to the act could mean terrorism insurance capacity "may be difficult to acquire at reasonable costs for insureds, especially those with significant exposures in a central business district or major city," the report says.
The report was based on a survey of nearly 2,600 companies. It is described as "the only analysis of its kind in the U.S. market for terrorism risk insurance coverage" and is the third edition.
Other highlights of the report include:
- Larger companies are more likely to purchase property terrorism insurance and also to see the lowest cost as a percentage of overall property premiums.
- Media clients purchased property terrorism insurance at a higher rate -- 871 percent -- than did those in any other industry segment in 2012. Companies in the health care, financial institutions, education, and public entity sectors had the next highest take-up rates among the 17 industry segments surveyed, all above 70 percent.
- Construction companies paid the most of any sector for terrorism insurance with a median rate of $63 per million.
- More companies in the Northeast -- 77 percent -- purchased property terrorism insurance than in any other region. The West saw the lowest take-up rate at 53 percent.
- Companies in the Midwest paid the lowest rates on average for property terrorism insurance in 2012, followed closely by companies in the West.
Read more at the WorkersComp Forum homepage.
May 21, 2013
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