Interest in diverse approaches in terrorism cover grows at IFTRIP

Terrorism cover might reach up to 2-4 percent of investment portfolios as investors look to diversify away from pure natural catastrophe risks.

That’s according to Florian Steiger, cat bond strategy lead at Twelve Capital. Steiger was speaking at the recent annual International Forum of Terrorism (Re)insurance Pools (IFTRIP) conference in Brussels. For further growth of terrorism coverages in catastrophe bonds, excellent modelling and better understanding of the risk would be the most important next steps to get investors truly comfortable with the risk, according to Steiger. Many investors see terrorism cover as a useful but complex diversifier for Insurance Linked Securities funds.

Delegates at the conference also considered cyber terrorism and the issues for the global reinsurance pools, each of which take different approaches but are looking to collaborate further on how to respond to and how to define cyber terrorism. In the debate, it became clear that the commercial market’s views are split between those who believe that cyber more generally is uninsurable and that some form of pooling and even government intervention is necessary and those who consider it vital to model and meet this emerging challenge as a private market.

Julian Enoizi, secretariat of IFTRIP and chief executive at Pool Re, said: nted: “The conference’s discussions covering propositions and cover, cat bonds, modelling and technology, cyber as well as the perspectives of customers, insurers, victims and brokers were fascinating and revealing. Given the growing worldwide threat from terrorism and its effects, these issues are rightly top of the agenda and this opportunity to share expertise and understanding at IFTRIP is unparalleled.”

The next meeting of IFTRIP is in Washington DC in June 2020.

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