It may be nearly nine years since a major terror attack on US soil. But, US companies are clearly not becoming complacent.
According to a new survey from insurance giant Marsh, 61 percent of firms surveyed by Marsh purchased property terrorism insurance in 2009, up from 57 percent in 2008.
In 2003, just 27 percent of companies bought terror insurance.
"Terrorism risk remains a critical concern for global companies," said Ben Tucker, a senior vice president in Marsh's Property Practice and a lead author of the report, in a press release. "Recent attempted attacks in New York's Times Square and on a Detroit-bound flight on Christmas day 2009 remind companies of the importance of securing adequate financial protection against the possible catastrophic impact of terrorist events."
As demand has climbed, median premium rates have fallen, dropping about 33 percent in 2009, to $25 per million of total insured value (TIV).
Utility, real estate, health care, transportation, financial institutions, and media companies purchased property terrorism insurance at the highest rates of the 15 industry segments reviewed, according to Marsh.
Construction, hospitality, utility, and real estate companies experienced the highest median premium rates, exceeding $50 per million of TIV, according to the survey.
Marsh found that as a percentage of total property premiums, financial institutions (24 percent) and transportation companies (17 percent) paid the largest share; hospitality firms saw the greatest decrease in this area (from 13 percent to 4 percent).
Capacity in the standalone terrorism insurance market, which has served as an important alternative or supplement to coverage made available through the Terrorism Risk Insurance Act (TRIA), has grown considerably in recent years, to a theoretical maximum of $3.76 billion. Primary purchasers in 2009 included hospitality companies, large real estate firms, and financial institutions.
The study population does not include placements in the United States for foreign-based multinationals or for small-firm placements made through package policies. TIV for the sample ranged between $75,000 and $303 billion, with a median of $303 million. Companies with nominal terrorism premiums of $1 were omitted from the calculations of median terrorism premium rates. Standalone terrorism premiums were omitted from the calculation of terrorism premium as a percentage of property premiums.
Marsh's analysis was based on property insurance placements incepting during calendar year 2009 for a sample of 1,382 Marsh clients.