Like many other catastrophe perils, a terrorism incident can disrupt or destroy a business so protecting the business with insurance is a sensible mitigation strategy.
However unlike natural catastrophes, terrorism manifests itself in a dynamic and constantly changing manner and is unpredictable not only in its frequency and severity but in its very nature. Evidence for this can be seen by examining the recent history of terrorism. Terrorist tactics and methodologies during the 1970 to 2000 period featured significant use of guns, bombs, hijackings and kidnappings, but since 2000 methodologies have also included attacks involving vehicles as weapons, knives, airplanes and chemical or biological compounds. Tomorrow’s attacks could include cyber terrorism, drones and radiological isotopes.
Given the inherent unpredictability of terrorism, combined with its constant evolution, a business that does not buy terrorism insurance is vulnerable and that vulnerability will probably increase over time as terrorist methods evolve.
Some businesses may consider that it is more beneficial to save the additional premium needed to buy terrorism cover. Though this can be challenged as it seems illogical for those businesses to invariably buy cover
for natural perils while leaving themselves vulnerable to something that is able to constantly change and is ultimately created to cause harm and disruption.
Do all commercial insurance policies exclude terrorism? No, many still provide some cover although commercial property policies invariably contain a terrorism exclusion.
Cyber terrorism property damage
Terrorism schemes were essentially created to address the conventional
manifestation of terrorists causing damage. This was primarily achieved through using traditional methods such as person or vehicle borne improvised explosive devices, or aircraft. However, the common thread in any of these was that the terrorists had to firstly create or gain access to the means of damage and then find a way of bringing it within sufficient proximity of the property so as to cause damage. Since the IRA campaigns and 9/11 attacks, in most developed countries this is more difficult than ever before as the efforts of counter-terrorism agencies cut off traditional attack vectors.
Clearly this is positive news but unfortunately this is where terrorism is somewhat different from natural perils such as storm. Terrorism is a human peril and so when one attack vector becomes more difficult, others
may be created. The connected world presents an opportunity for those who wish to use technology for nefarious means. Whether hacktivist, criminal or terrorist, over the past decade it has become possible to disrupt the activities of a business or steal its data or money by remote digital means and one only has to look at the news to see regular occurrences of such incidents.
Talk to our team on 01509 274000 to discuss your terrorism insurance needs for your business.