Terrorism risk: more coverage, lower rates.

• Author: Marshall, Jeffrey
• Position: Insurance

There's good news for both buyers and sellers of property terrorism insurance, says risk and insurance services giant Marsh Inc. Nearly six in 10 large and mid-sized U.S. businesses obtained insurance to cover property terrorism risks during 2005, a dramatic increase from the 2003 average of 27 percent and up from 50 percent in 2004. Meanwhile, however, the cost of property terrorism insurance in 2005 was 25 percent lower on average than in 2004.

A recent report from Marsh finds the purchase of property terrorism insurance in 2005 varied considerably, depending on a company's total insured values, location and industry sector. The report is based on data compiled from 1,623 businesses and government entities that purchased or renewed property insurance policies in 2005. Notably, while smaller companies (those with total insured values under $100 million) were far less likely in the past to purchase this coverage, nearly half of them did so in 2005.

"Take-up" rates--the percentage of companies buying the coverage--varied considerably by region: about 67 percent of firms in the Northeast and 58 percent of Midwestern firms bought property terrorism insurance in 2005, compared with 53 percent in the West and 50 percent in the South. Take-up rates increased most dramatically in the West--to 53 percent from 34 percent in 2004--and in the Northeast, where they rose to 67 percent from 53 percent in 2004.

"There's an increasing...