Insurers must tackle the growing threat of political violence and terrorism

GlobalData’s surveying has found that political risk and violence is set to be a significant concern for the insurance industry over the next three years. The growing frequency of political violence and economic instability underscores the urgent need for businesses to adopt practical and effective protective strategies.

A poll conducted by GlobalData on Verdict Media sites in Q2 2024 found that 15.1% of respondents selected political risk and violence as the biggest risk to the insurance industry over the next three years. Only cyber risk (36.6%) and severe weather and natural catastrophes (25.2%) received more votes in the poll. As geopolitical tensions escalate globally, businesses are increasingly exposed to these risks, necessitating a proactive approach to public protection measures.

What is the biggest risk to the insurance industry over the next three years? 2024

According to Pool Re’s 2024 Annual Threat Report, the UK faces a substantial terrorism threat level, as well as heightened threats from hostile foreign states. MI5 has reported a 48% increase in state threat investigations over the past year. With Pool Re’s threat level suggesting an attack is likely in 2025, more insurers should capitalise on the growing market of terrorism and political violence insurance, with the pool of insureds likely to grow. In September 2024, the UK Government introduced the Terrorism (Protection of Premises) Bill, also known as Martyn’s Law, which ensures that premises are better prepared and ready to respond to a terrorist attack. UK businesses will need to adopt reasonably practical public protection measures such as terrorism and political violence insurance, which safeguards businesses from geopolitical tensions and offers valuable protection.

With the increased risk of terrorism and political violence, insurers must ensure their policies are comprehensive and tailored to meet the specific needs of businesses across various sectors. Developing innovative products, enhancing risk assessment capabilities, and educating businesses on the importance of coverage will be critical. Policies can include comprehensive security recommendations and crisis management support, equipping businesses with the necessary tools and strategies to effectively manage and respond to such events.