The global political risk and crisis management insurance market looks set to exceed US$10bn by 2018, an anticipated US$2bn of growth, according to KPMG.
In a newly-released report, the accountancy giant notes that challenging macroeconomic environment, recent terrorist attacks, growing cyber threats and global political uncertainties are leading to a surge in demand for political risk and crisis management protection.
There are currently two significant gaps in the market. The first is the need for new products that address emerging customer needs such as, new terrorism insurance products that tackle business interruption costs without property damage, such as ‘lone wolf’ shooter incidents.
The second is the capability to evolve insurance offerings towards prevention and response consulting services, and thereby truly addressing the key concerns – how can they stop risks from happening and how can they minimise disruption after an event has taken place?
“Political risk and crisis management is currently one of the top issues in the minds of executives across various industries,” said Paul Merrey, a partner in KPMG’s global strategy group. “The recent Turkey coup attempt, terrorism attacks in France, Germany and outside Europe have all put extra pressure on the insurance industry to find feasible solutions.
“All these events require robust crisis management response from the businesses involved and the insurance industry can of course help facilitate this process. In fact, our analysis indicates, that providing strong risk prevention and response services could be one of the major areas of growth over the next two years.”
Merrey adds that terrorism insurance has traditionally focused more on property damage – such as the bombing attacks carried out in London’s financial district in the 1990s – rather than the sort of business interruption that companies suffered as a result of the recent wave of attacks.
“In 2015 the global cost of terrorism was US$32bn, but the indirect cost was much higher. If you look at the Paris incident, business interruption costs were $12bn,” he notes.
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