The U.K.’s Hiscox Plc, a leading London market insurer, partly owned by Chubb Corp., has reportedly seen an increase in the demand for coverage of terrorist related risks by small and medium-sized U.S. companies since the beginning of the war in Iraq; however, overall demand for the coverage remains low.
According to a report from Reuters News Agency, Hiscox noted a five-fold increase in inquiries about terrorist coverage since the beginning of the war. The increase coincides with the 120 day period mandated by the Terrorism Risk Insurance Act (TRIA), which provided a three month period during which companies could seek quotes on the cost of terrorist coverage from Insurers, and the additional month for the potential insured to decide if they wanted the coverage or not.
The main problem with obtaining terrorist coverage, even though huge losses like the WTC attacks are now backed-up by the U.S. government, remains the uncertainty surrounding the risks. Underwriters are still having difficulty setting rates on risks due to insufficient data and the unknowable components involved in any terrorist action.
Most companies do not appear to consider themselves to be especially at risk, and have therefore not sought coverage. The article cited a recent IIABA survey, which concluded that only around 20 percent of medium sized business had bought terrorist cover.
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