Terrorism Insurance Sales Lag Sticker shock and a perceived lack of exposure to terrorist events in non-urban areas are dissuading many organizations from purchasing terrorism insurance, according to those involved in selling or buying this controversial coverage.
There are those, however, who did buy, often after spirited negotiations over premiums and terms with insurers uncertain on exactly how to price and underwrite this new product. The Terrorism Risk Insurance Act of 2002 requires insurers to offer terrorism coverage, but does not mandate its purchase and does not specify what insurers can charge.
“Only about 15 percent of clients with property values over $100 million have purchased the terrorism coverage,” said Cynthia Michener, a spokesperson for The Hartford Financial Services Group, based in Hartford, Conn. The 85 percent that turned it down “didn't consider themselves in hazardous locations for terrorism,” Ms. Michener added. “These are large clients with risk managers and they decided to assume the risk themselves.”
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