Guy Carpenter has called for the reauthorisation of the US Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) amid a spike in terrorist activities.
Its latest report on global terrorism noted Islamic militants shifting to softer targets, with attacks and plots becoming more localised.
Western countries, including the US and UK, have experienced “relatively low capability but high profile attacks”, according to Guy Carpenter, while Syria and Iraq continue to make the Middle East a “volatile landscape”. Algeria and Kenya have shown that groups are still capable of launching destructive and sophisticated attacks on commercial entities.
But evolving capacity and the absence of a major terrorism loss for reinsurers have resulted in a softening of the terrorism reinsurance market in some countries and regions, according to Aaron Bueler, managing director and leader of Guy Carpenter's workers’ compensation practice and terrorism task force.
“In the US, the renewal of TRIPRA will play a significant role in determining how much affordable capacity will be available for businesses who buy terrorism insurance coverages,” he added.
TRIPRA is due to expire on 31 December and “either substantial modification or non-renewal … has the potential to impact terrorism coverage in the US”. The US House of Representatives and Senate are currently considering various changes to the act.
Guy Carpenter noted in its report that market reactions to uncertainty over TRIPRA's future were evident during the first five months of 2014, as several workers’ compensation renewals with sizeable employee concentrations in large US cities changed carriers and, in some cases, moved into various residual market mechanisms.
“We are encouraged by the recent legislative activity addressing the expiration of TRIPRA and hope for continued progress and a final bill in the near future,” said Bueler. “The planning process for the 1 January 2015 (re)insurance season will start soon and the certainty of a TRIPRA renewal will be a key factor.”
