A Study of Terrorism Risk and Insurance

• Main Authors: Wen-Mei Lo, 羅文玫
• Other Authors: Tong-Liang Kao
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/88356000563845381790

碩士 === 淡江大學 === 保險學系保險經營碩士在職專班 === 95 === Prior to the tragic attacks of September 11th 2001, the man-made risk like terrorism risk was certainly not regarded as the most costly disaster for the insurance industry. However, an entirely new loss dimension caused by the terrorist attacks had led to some negative impacts on the international insurance and reinsurance markets, such as the severe shrinkage of the insurance and reinsurance capacity, a sharp increase of premium, a big loss of financial revenue and the constraints of the solvency. As a result, the international insurers and reinsurers are eager to re-evaluate terrorism risk. At the same time, the governments of the most countries also try to work out the feasibly mitigation measures to cope with this extreme event. Besides the generally theoretical study of the act of terrorism, the paper presents the insurability of the terrorism risk associated with the current development of terrorism models. It also discusses how to well deal with the mega-terrorism risks by means of a variety of risk management options like the change of the insurance coverage, retention, captive, reinsurance, terrorism pool, insurance-linked securities or government’s assistance. Although the terrorism risk is not a threat to Taiwan at this stage, Taiwan might benefit from the valuable and successful experience of some government sponsored insurance programs depicted in the paper, for instance, TRIA & TRIEA for U.S.A., Pool Re for U.K., GAREAT for France, Extremus-AG for Germany and CCS for Spain, in addition to the Terrorism Pool for Personal Accident Insurance, which has been operating here since Jan. 2004. Finally, the paper concludes some major findings, proposes some considerable suggestions as well as poses two open questions for further study in future.