Interest in stand-alone terrorism cover increases in Canada

A combination of increased capacity, more predictable premium rates and innovative program design is creating steady growth in the take up of stand-alone terrorism insurance, according to Aons latest Stand-alone terrorism market update. Also, the ongoing bombardment of television images from Iraq, intelligence about foiled attacks and frequent evidence emerging about the intentions and ongoing capabilities of Islamic terrorists has increased awareness among buyers and further fuelled demand, says an Aon release announcing the report, available online at Most existing buyers renew and there is a steady stream of new buyers of the stand-alone product, said Will Farmer, a director in Aons Crisis Management Division and author of the report.The Aon report notes most buyers would prefer their property all-risks insurers to cover full terrorism, and only to use the stand-alone terrorism market as a last resort.Nevertheless, the report added, the reticence of property insurers to soften their position while the threat of more catastrophic terrorism losses remain suggests the stand-alone market will continue to have an important role to play in providing cover for terrorism.Aon said there is an increasing interest in terrorism cover in Canada, Latin America, Eastern Europe, the United Kingdom, Germany, Southern Europe, India and the Far East.The insurance markets ability to meet this growing demand is based on the extra capacity that has been attracted by the markets current favourable premium-to-claims loss ratio, Aon said. Overall, capacity has increased by around 20% since January 2006, to around US$1.5 billion, and for many risks there is a surplus, creating a softer market with rate reductions of 10-20% being typical.Overall, rates have declined by around 50-60% since 2002.But certain areas remain terrorism capacity hotspots. In some parts of New York (midtown and downtown Manhattan) and Brussels, for example, it is difficult to obtain cover at acceptable prices for new risks, Aon said.