Report of the President’s Working (PWG) Group On Financial Markets. The Long-Term Availability and Affordability ofInsurance for Terrorism Risk. Completed pursuant to 15 U.S.C. 6701 note § 108(e) April 2014. “Consistent with the 2006 and 2010 PWG reports, this Report draws its data and conclusions from commentssubmitted in response to the PWG Notice, particularly data provided by two global insurance brokers, as well asfrom consultations with various stakeholders. The Findings of the PWG in this Report include:
- Insurance for terrorism risk currently is available and affordable. The availability and affordability of insurance for terrorism risk has not changed appreciably since 2010.
- Prices for terrorism risk insurance vary considerably depending upon the policyholder’s industry and the location of the risk exposures.
- Such prices have declined since TRIA was enacted and, in the aggregate, currently approximate 3 to 5 percent of commercial property insurance premiums.
- Take-up rates –i.e., the percentage of policyholders that purchase coverage for terrorism risk – have improved since the adoption of TRIA and are roughly stable at 60 percent in the aggregate (as compared to 27 percent in 2003, the first full year TRIA was in effect).
- Information provided to the PWG in response to the PWG Notice indicates that the market currently is tightening in light of uncertainty as to whether TRIA will be renewed.
- The private market does not have the capacity to provide reinsurance for terrorism risk to the extent currently provided by TRIA.
- In the absence of TRIA, terrorism risk insurance likely would be less available. Coverage that would be available likely would be more costly and/or limited in scope.”