As carrier executives and members of carrier boards work to get more comfortable with the risks their property/casualty insurance enterprises are taking on, one risk they will likely want to investigate more closely is terrorism risk.

Executive Summary

Carrier Management asked Chris Holt, consulting director for the crisis management team of Towers Watson, a former bomb disposal expert and one of the architects of Sunstone, a new terror risk model, what carrier executives and directors should ask to get a better handle on the exposure of their companies to terror risk.

Management and board-level scrutiny of all risk issues seems more imperative as regulators seek individual risk and solvency assessments from carriers.

And a focus on terror risk, in particular, seems relevant in light of the possibility that the federal Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) will lapse at the end of 2014. Rating agencies like A.M. Best are already announcing the potential to assign negative outlooks to insurers writing terror-exposed policies this year (to those that don’t provide sufficient action plans to reduce terrorism risk exposures if TRIPRA expires).

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