New research shows that events in many countries around the world have raised concerns about the ranking of key risks on the top 50 list.
Most notably, 83 percent of respondents agree that computer crimes, such as hacking, were ranked far too low at 18 in the 2013 survey. Similarly, more than half of the research respondents stated that a ranking of 46 was also too low for terrorism risk, given the pending expiration of the Terrorism Risk Insurance Act.
“In response to TRIA's uncertain future, Aon has seen a 30 percent increase in purchasing within the standalone terrorism market,” said Aaron Davis, managing director with Aon Risk Solutions’ Property practice. “If it is not extended, the loss of direct access to TRIA will substantially reduce terrorism limits for U.S. assets. Additionally, the private market most likely will not have enough capacity to take on this added risk should TRIA not be renewed. Companies should be in a planning position right now to prepare for this possible outcome.”
Preparing ahead of the expiration deadline becomes crucial for companies that may be facing several challenges at this renewal, such as the impact on embedded TRIA coverage, standalone terrorism pricing and TRIA captive placements. Aon’s recent research shows that many industries are at a high risk if TRIA is not renewed, specifically health care, transportation, real estate and financial institutions.
To help companies in this situation, Aon designed several innovative products and solutions to help provide the best available protection for all businesses, including: Long-term policies in the standalone market: mitigates exposure to pricing volatility among other benefits Commitment of capacity: reserves terrorism capacity or helps to remove the uncertainty of capacity and pricing volatility, depending on TRIA’s renewal Contingent terrorism premium protection: hedges against potential additional premium TRIA captive flip: purchase substantial limits that are not normally available in certain geographies Aon's exclusive North American Standalone Terrorism Structured Portfolio Solution offers clients up to $500 mm of terrorism limits to either augment or replace TRIA capacity.
“In conducting this and other research, it has become clear that risks are growing in complexity, becoming increasingly interdependent and requiring more innovative and creative solutions,” said Stephen Cross, chairman of Aon Global Risk Consulting. “This constellation effect of, or interconnectivity between, risks might not always have been recognized by organizations but could have a significant impact on their approach to risk management and overall business performance.”