Catlin Bermuda, a subsidiary of Catlin Group, has introduced a new insurance and reinsurance product to provide coverage in the event of nuclear, chemical, biological or radiological terrorist acts.
In the past, insurers have been reluctant to provide coverage for nuclear, chemical, biological or radiological (NCBR) attacks partly due to the unacceptable accumulation of risk posed by these types of events.
The innovative product attempts to remedy this by restricting the coverage to NCBR events that occur in a specified geographic area that is pre-defined by the insured or cedant. Furthermore, the service offers the option to be taken out on an insurance or reinsurance basis and can cover most underlying forms of insurance.
The restriction of the geographic area means that more insurance and reinsurance capacity will be available for NCBR terrorism at much more reasonable pricing levels.
The Catlin coverage can be used to supplement individual countries’ national terrorism insurance frameworks, such as, for example, the US Terrorism Risk Insurance Extension Act (TRIEA). This can be done either by providing protection for losses within an assured’s or cedant’s retentions, co-participation or plugging other gaps in the frameworks.
A 5% risk of a NCBR event in the US within the next 12 months has been predicted by a leading catastrophe modeling agency. There have been serious NCBR attacks in the recent past, including the release of sarin gas in the Tokyo subway system in 1995 and the anthrax attacks that occurred in the US in 2001.