The recently launched Journal of Terrorism and Cyber Insurance recognises the increasing concerns over terrorism and the burgeoning insurance market in cyber risk.
The evolving nature of the terrorism threat, its increasingly cyber face – and what role insurance could and should play – was discussed at the recent Australian Reinsurance Pool Corporation-OECD Global Terrorism Risk Insurance Conference in Canberra.
Broking experts at the conference stressed the importance of general insurance brokers having access to more information about terror and cyber terror risks. Given the increasing risk of terrorist attacks and keeping in mind the recent cyber attacks in Australia and the rest of the world, brokers should take terrorism and damage arising from other violent activities into account when managing a client’s risks. The lack of insurance specific literature was also discussed by attendees at the conference during the launch of the journal.
There is no shortage of literature on terrorism, but much has a qualitative geopolitical and international relations focus, and little is directly relevant to terrorism insurance underwriting or risk management. Natural hazard science is commonly studied at college, and to some level in the insurance industry’s further education and training courses. But this is not the case with terrorism risk and even fifteen years after 9/11, knowledge and understanding of terrorism insurance risk modeling across the industry is still relatively low.
Rachel Anne Carter, Managing Editor at the Journal says “This journal has been conceived as a step towards redressing the imbalance in available terrorism literature. It was originally conceived as a journal of terrorism insurance however it has now been extended to include cyber risk recognizing the increasing insurance industry concerns over cyber terrorism.”
— Rachel Carter (@RachACarter) October 13, 2016
The first issue of the journal is a solid step in this direction, and includes articles on the ISIS attacks in Paris in November 2015; terrorism insurance in France and Australia; parametric terrorism insurance triggers; non-conventional threats; the clean-up costs of anthrax, and the terrorist use of drones.
“The aim of the open access journal is to raise the industry’s level of knowledge and understanding of terrorism risk. By increasing information transparency for this subject the editorial board hopes to facilitate the growth of the terrorism insurance market, which serves the risk management requirements of the wider international community” says Carter.
The four founding editors of the journal have extensive knowledge of the field. Carter has terrorism insurance and terrorism policy experience with both OECD and Pool Re (the UK’s terrorism insurance pool). She currently runs her own consulting business specializing in product innovation for terrorism insurance and cyber insurance. Dr. Raveem Ismail, specialty terrorism underwriter at Ariel Re, brings to the editorial board detailed direct terrorism and political risk underwriting knowledge. Padraig Belton is a writer with extensive political risk expertise, having served as a correspondent in the Middle East and Pakistan. As chief architect of the RMS terrorism model, Gordon Woo will bring terrorism risk modeling expertise to the team and have the responsibility and pleasure to review all article submissions.
Currently the main buyers of terrorism insurance cover are large corporate entities. Many small and medium businesses without cover are underestimating the need for terrorism insurance often feeling that a terrorist attack will not affect them or their business or that the cover offered is too expensive. Cyber-terrorism is not a new concept but it has now become an easy way to destroying economic, political, and sociological structures.
Cyber-terrorism seems to have found a niche where the destruction or disruption of service isn’t a military or state target, but that of a commercial entity or service – the businesses, services, or information that people depend upon.
Terrorism insurance should be seen as a valuable protection mechanism for for businesses, particularly small businesses having an insurance policy in which they can recover money quickly after an attack may be the difference between the business being resilient and coming back from an attack and the business going bankrupt.