Nearly 60 percent of large and midsized U.S. businesses obtained terrorism insurance during 2005, a new study reports.
The findings by insurance brokerage Marsh Inc., New York, said the figures represent a dramatic increase from the 2003 average of 27 percent, and are up from 50 percent in 2004.
Meanwhile, the cost of property terrorism insurance in 2005 was 25 percent lower on average than the 2004 rate.
The study found that the purchase of property terrorism insurance in 2005 varied considerably, depending on a company's total insured values, location and industry sector.
While smaller companies (those with total insured values less than $100 million) were far less likely in the past to purchase this coverage, the study noted nearly half of them did so in 2005.
Take-up rates--the percentage of companies buying the coverage--varied considerably by region: about 67 percent of firms in the U.S. Northeast and 58 percent of Midwest firms purchased property terrorism insurance in 2005, compared with 53 percent in the West and 50 percent in the South.
Take-up rates increased most dramatically in the West--to 53 percent from 34 percent in 2004--and in the Northeast, where the take-up rates rose to 67 percent in 2005 from 53 percent a year earlier.
In addition to coverage certified under the Terrorism Risk Insurance Act (TRIA), businesses can purchase separate, "standalone" terrorism insurance policies that are outside of their property insurance programs and do not require U.S. government certification.
According to Marsh's report, capacity in the standalone property terrorism insurance market is relatively stable, though limited.
But any failure by Congress to extend or make permanent TRIA next year will lead to a severe capacity crunch in the market, the report said.
The report is based on data compiled from 1,623 businesses and government entities that purchased or renewed property insurance policies in 2005.
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