Canada goes against global terrorism insurance trend

The Canadian government has failed to follow the global trend of becoming more involved in mitigating the risk exposure of insurance and reinsurance companies, according to a Guy Carpenter & Company, LLC report. While a number of countries have developed explicit schemes or terror pools that address the risks of terrorism, Canada has not implemented a government reinsurance scheme as a financial backstop.The Canadian government felt insurers had not shown a willingness to commit a sufficient percentage of their assets to any proposed program, write the authors of Global Terror Insurance Market: The World Continues on High Alert.For primary policies, many Canadian insurers have opted to exclude terrorism from commercial property policies that are written on an all-risk basis, the report notes.One of the issues for Canada is fire following an event and the possible exclusion of terrorism from these policies.Large parts of insurance law are more than 80 years old and in need of updating, the report says.Such laws are confusing when faced with current day risks and policies, notably multiperil covers.According to researchers, the insurance and reinsurance industry proposes that fire-following be provided as a separate cover in earthquake endorsements, and that fire following a terror event be excluded.