Terror cover premiums fall as capacity soars and memories fade

Insurance against terror attacks is getting cheaper as competition increases and memories of 11 September 2001 fade, experts have claimed.

Marsh’s head of terrorism cover, Julian Taylor, said “Straight after 9-11 prices were pretty high. Over time we have distanced ourselves from 9-11 and there’s more capacity in the market, so prices have softened.

Hiscox Terrorism and political violence underwriter, Stephen Ashwell, said rates had fallen by 50% since 2002, and could fall a further 10 to 15% in 2004.

“There was a stage where if you were a cheese farm in Finland you would be rated on the same level as an office block in New York because terror insurance cover was such a rare commodity,” said Ashwell.

In the aftermath of September 11, Ashwell said Lloyd’s offered just $100m of terror cover per policy, but the amount of cover available has since soared, he said.

Approximately 20% of the terror insurance and political risk policies written by Hiscox were sold to multinational firms, Ashwell revealed.

While greater capacity was the main reason behind the fall in prices, Ashwell said he had seen a more blasé attitude towards terrorism becoming more common.