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Daily Insurance Industry News
Tuesday 19th of June 2018
August 11, 2011

Guy Carpenter reports on terrorism risk transfer

by Gill Montia

Story link: Guy Carpenter reports on terrorism risk transfer

A new report on global terrorism from Guy Carpenter finds that while recorded incidents of terror around the world remain at historically high levels, the reinsurance industry continues to meet current demands for terrorism risk transfer.

The number of terrorist attacks peaked at over 14,400 in 2006, with only a slight dip in frequency over the past five years, and the study notes that despite an estimated $6 billion to $8 billion of terror reinsurance, capacity is currently available in the US market and globally.

However, Guy Carpenter warns that the industry remains vulnerable to a major terrorism loss, pointing out that the global terror threat is becoming increasingly diverse and dispersed in nature.

The firm’s head of terror risk specialty, Paul Knutson, explains: “The dynamic nature of terrorism, and the uncertainty in identifying the targets and frequency of attacks, requires a different approach to risk management and thus a different approach to transferring risk to the reinsurance market.”

He continues: “Compared with natural hazards such as hurricanes and earthquakes, the underlying analytics supporting terrorism risk management are still in the early stages of their evolution.”

 

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