US terrorism cover rises

Marsh says US terrorism insurance take-up rates rose in 2009 across companies of all sizes and all industries with 61% of firms buying property terrorism insurance in 2009, an increase from 57% in 2008.

That represents a steady climb from 27% in 2003, according to The Marsh Report: Terrorism Risk Insurance 2010.

Median premium rates declined from $37 per million of total insured value (TIV) in 2008 to $25 per million in 2009 according to the report, which indicated several differences by industry, region, and company size.

• 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, with take-up rates in each sector exceeding 70%.
• Construction, hospitality, utility, and real estate companies experienced the highest median premium rates, exceeding $50 per million of TIV.
• Take-up rates rose most significantly in the Northeast, increased slightly in the South and the West, and remained flat in the Midwest.
• 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%to 4 percent).
• Smaller companies-with TIV below $100m-spent 22%of total property premiums on terrorism coverage in 2009. By contrast, relative spending was significantly lower for companies between $100m and $500m in TIV (5 percent), $500m to $1bn (7%), and $1 billion or more (11%).

"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. "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."