IIC.Terrorism

Question 1

How has terrorism changed in recent years? (WHO is attacking)

Answer 1

The perpetrators of attacks have transitioned from organized terror groups (e.g.: al-Qaeda) to lone actors that have been inspired or radicalized by organized groups.

Question 2

How has terrorism changed in recent years? (Means of Attack)

Answer 2

The means of attacks have transition from large scale bombings to armed attacks (use of personal weapons (knives and guns), vehicles, and smaller bombs in some cases).

Question 3

How has terrorism changed in recent years? (Targets of attack)

Answer 3

The targets of attacks have transitioned from state targets (police, military or government) to civilian targets in streets, shops, or concert venues.

Question 4

How have the shifts in target of terrorist attacks changed the type of damage inflicted?

Answer 4

• Property damage is lower than before
• Casualties and Suffering may be higher
• Indirect costs to business (i.e.: business interruption)

Question 5

RECALL: what was the original purpose of TRIA? (3)

Answer 5

• Ensure availability and affordability of private coverage
• Give private markets time to stabilize
• Build capacity of absorb future losses

Question 6

RECALL: briefly describe the U.S. government terrorism program TRIPRA. (3)

Answer 6

• Requires that insurers offer commercial P&C terrorism coverage for certified acts of terrorism
• Costs are borne privately up to a certain level, then the government steps in a reinsurer
• Certain conditions are required before coverage is triggered under TRIPRA

Question 7

RECALL: what are the triggers for coverage under TRIPRA? (3)

Answer 7

• the act must satisfy the definition of terrorism (not covered in reading)
• the act must be certified by various government bodies
• losses must exceed a specific monetary threshold

Question 8

What broad purchase options are available for terrorism coverage in Canada? (2)

Answer 8

• can be first or third party exposures

- can be a standalone terrorism insurance or an endorsement to a property policy

Question 9

What are the benefits of a standalone terrorism policy? (4)

Answer 9

• higher limits
• specific limits for separate locations (some locations may be more prone to attacks than others)
• multi-year coverage
• business interruption can be included

Question 10

What are some possible benefit enhancements to basic terrorism coverage? (6) (hint: BEPARN)

Answer 10

• Business interruption
• Event cancellation
• Political violence (e.g.: G20 protests in Toronto in 2010)
• Active assailant situations
• Reservation cancellation
• Nuclear, chemical, biological, radiological terrorism

Question 11

In general, how is terrorism insurance priced?

Answer 11

Generally, a % of the property premium.

Question 12

How has assessing terrorism risk become more challenging in recent years?

Answer 12

• it is easier than ever for a lone actor to commit acts of terrorism (can happen anywhere, at anytime)
• the spectrum of impacts has expanded (not only 9/11 style of attacks, but also vehicles driven onto a sidewalk which just about anyone can do)

Question 13

Identify considerations for assessing terrorism risk to a business. (4)

Answer 13

• attractiveness of location as target (# of people/employees, profile of business)
• accessibility of location (security, # of entry points)
• financial impact (risk to assets, business interruption)
• crisis management framework:
  
  • are threats investigated?
  • are there evacuation procedures?
  • is there post event counselling?

Question 14

Identify a similarity between assessing Terrorism and Earthquake risk.

Answer 14

Both use models to determine a PML (Probable Maximum Loss).