Terrorism insurance and associated risk management strategies are dynamic and complex issues, with many interdependent factors contributing to managing the risk. Foreign relations, the effectiveness of homeland defense, and the ambiguous nature of the risk make terrorism losses extremely challenging to predict and quantify. It is difficult for insurers to effectively price and reserve capacity for their potential exposure to catastrophic terrorism losses.
The standalone terrorism market has grown and evolved in recent years and now offers a number of viable program solutions for companies to mitigate their terrorism risks.