Terrorism coverage premium rates are predicted to rise up to 25% in 2009, despite an influx of $125m of new capacity into the market, a report released today by global insurance broker Lockton says.
Last year and the first quarter of this year proved to be a busy period for terrorist-related losses around the globe, with attacks in Islamabad and Mumbai, social unrest in Thailand and Greece, the return of sectarian violence in Northern Ireland and the attack on the Sri Lankan cricket team all costing insurers.
Those events overshadowed locations where attacks are perhaps more commonplace although the likes of Iraq, Yemen, Bolivia and Colombia all still saw terrorist activity.
Prices for terrorism coverage had been on the slide. But the report from Lockton says that they now appear to have "levelled off and we are no longer seeing rate reductions."
The report adds: "Several interviews with underwriters indicate that rate increases of 25% or more are anticipated by the end of 2009."
Those projections are despite $125m of new capacity in the market place with Aspen Re, Pioneer, Canopius' Lloyd's syndicate 4444, Sagicor's Lloyd's syndicate 1206 and Munich Re's Lloyd's syndicate 0457 all investing to give a total market capacity of around $2bn.
A result of the additional investment, the report says, has been a large amount of movement of underwriters from one company or syndicate to another.