Terrorism insurance buys up in second quarter: Marsh

More than 46% of U.S. businesses who purchased property insurance in the second quarter of 2004 also bought terrorism risk coverage, according to the latest survey from international broker Marsh Inc.
Marsh has been tracking terrorism insurance purchases since the implementation of the Terrorism Risk Insurance Act at the end of 2002 and finds this most recent quarter saw the highest uptake in coverage since that time. The purchase levels in the second quarter of 2004 were twice that seen during the same period the year prior, and a slight increase over the first quarter of 2004.
The study also finds that the median rate for terrorism insurance as a percentage of total insured value remained flat for the most recent quarter.
While the biggest business (those with insured values above $1 billion) saw a 20% decrease in terrorism coverage take-up rates, while for those businesses with total insured values between US$500 million and US$1 billion, the take-up rates jumped 20%. Take-up rates were flat for smaller businesses.
Companies are seeing premiums for commercial property and other lines soften, thus allowing more resources to be directed to terrorism coverage, notes Stephen Lundin, senior vice president of Marsh. But terrorist events around the world may also be adding to the desire to purchase coverage.