Terrorists are increasingly able to modify, adapt and reinvent their tactics and quickly spread their methodologies to their worldwide support base. Economically, the effect of this change across the globe has been significant.
Tourism, trade and investments are examples of areas affected as countries grapple with terrorist actions, both direct and indirect. According to the Institute for Economics and Peace, although the peak of global economic impact from terror events was reached in 2014, it remains at historically high levels.
It is estimated that in the United Kingdom alone between 2004 and 2016, terrorism cost EUR 43 billion in gross domestic product growth. Across the European Union, that cost was estimated at EUR 180 billion, with the 2017 U.K. terrorist attacks creating an economic loss of around EUR 3.5 billion.(1)
The size of these figures demands that the political and industrial arenas take action to build capacity in the area of terrorism. Inevitably, the action takes the form of a security line of effort, but the (re)insurance sector also has an important role to play – directly, by offering products to consumers that mitigate the risk of loss, or indirectly, by offering solutions that minimize risk to government balance sheets. It is clear the (re)insurance industry will play an important role in shaping the response to this threat.
Guy Carpenter offers insights for driving innovation in terrorism protection in its report: Terrorism: A Maturing Market Meets an Evolving and Expanding Peril.
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(1) RAND Europe: The Cost of Terrorism in Europe, 2018.