This could partly be due to the decrease in cost of property terrorism insurance in 2005 by 25 percent compared to 2004 rates. The data compiled for this report came from “1,623 businesses and government entities that purchased or renewed property insurance policies in 2005.” Nearly half of businesses with total insured values less than $100 million purchased coverage.
Take-up rates – the percentage of companies buying the coverage – within specific industry sectors, “financial institutions, real-estate firms, and health-care facilities had the highest overall take-up rates, each exceeding 75 percent.”
Because of the events of September 11, 2001 “insurance companies excluded terrorism risks from their commercial policies” but “the Terrorism Insurance Act, or TRIA, signed into law by President Bush in November 2002, requires insurance companies to offer insurance for certain acts of terrorism in the U.S. that are ‘certified’ by the Secretary of the U.S. Treasury Department, the Secretary of State and the U.S. Attorney General.” TRIA based insurance “must be in amounts and have terms and conditions that do not differ materially from their other policies.”
Another popular alternative many businesses are utilizing is to “purchase separate or “standalone” terrorism insurance policies that are outside of their property insurance programs and do not require U.S. government certification.” However, if TRIA is not renewed or another alternative put in place the standalone insurance market may not have enough capacity to meet demand.
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