As part of his presentation, Mr. James noted that the market for terrorism has developed “exponentially” in the last five years. He called the market “developed and mature,” and said that capacity has increased from $50 million in 2001-02 to $1.4 billion in 2007-08.

Mr. James said, “The terrorism risk today is a truly global phenomenon which is often regarded as being uninsurable due to its unpredictable nature and the inability to apply traditional probabilistic modeling techniques to its assessment. The risk is a human one; however, that does not mean that it necessarily should be regarded as uninsurable.”

Mr. James also said that while take-up is low in the Middle East and North Africa, there has been an increase in coverage purchased because of a “massive investment” in the region, which fuels a desire by companies to fulfill lenders' requirements, which usually stipulate comprehensive coverage to include terrorism cover.”

He added that there is a growing need for local insurers to provide coverage, but he noted that many insurers avoid writing such risks as it is not part of their traditional book of business and they do not have adequate reinsurance treaties. Mr. James said the Lloyd's market has “significant specialist expertise and skills in this niche area to partner with local insurers on tailored solutions for Middle Eastern companies.”

Speaking to the market, Mr. James' presentation noted there are currently few real leaders. He suggested several underwriting considerations for writing terrorism risks in the region, including risk management of the facility owner, occupancy, building type and industry. For pricing risks, Mr. James suggested that insurers utilize data to create an acceptable mode and to consider risks individually.