The attacks in Paris were horrific, and have shaken France to the core. However, the implications for risk managers are limited. Apart from checking that their normal emergency response plans and security arrangements are in place, there is very little that they need to do differently to prepare their organisation for another similar attack.
The recent terrorist attacks by Islamist extremists on the satirical French magazine, Charlie Hebdo, and the killing of four people in a supermarket outside Paris, have been labelled the most deadly act of terrorism on French soil since the Algerian war. It is probably safe to acknowledge that the terrorists achieved their aims: they caused panic and outrage with their unexpected and indiscriminate killings of innocent people going about their day-to-day business.
Major cities are on high alert for similar attacks in the coming weeks after the thwarting of a major attack the next day in Verviers, Belgium.
Over the past few years, counter-terrorist operations have apparently prevented a number of 9/11-type attacks. These catastrophic events – what are called ‘spectaculars’ – have a big impact on insurers and our clients because they cause a lot of physical damage.
It would seem that we have now arrived at a stage where al-Qaeda is relying much more on its affiliates and allies to carry out ‘home-grown’ terrorist attacks. These are probably cheaper and easier to carry out than 9/11-style events, but have devastating human consequences and loss of life. As we saw in Paris, the physical damage was limited. We are likely to see more of these sorts of attacks in the future.
Since 9/11, the standalone terrorism insurance market has been established. It is able to cover another large-scale terrorist event that causes extensive physical damage. Those larger-scale events will remain covered.
The market is now bracing itself for incidents that are atypical and that cause non-physical damage, suffering monetary losses from denial of access or business interruption. We can expect to see new insurance products cater for the higher likelihood of smaller, more local attacks.
For more information, please speak to your usual Lockton contact, or contact me at +44 (0) 207 933 2291 or email@example.com.