The Organisation for Economic Co-operation and Development (OECD) has published a report warning of a significant lack of insurance to cope with future terrorist attacks.
Should any OECD country suffer a terrorist attack on the scale of the Sept 11 US atrocity, the insurance industry may not be able to cope, according to a report published by the organisation on 5 July 2005.
The twin towers attack caused an estimated $30 billion (€25 billion) of insurance losses and the cost of another such attack could be as high as $250 billion (€210 billion). Such a figure could exceed the combined insurance capacity of some markets and threaten national economic stability.
The report analyses developments in the private and public sector since 2001 aimed at dealing with the financial consequences of terrorist attacks. It concludes that the private sector, hampered by the problems of calculating such unpredictable risk, has so far not moved to provide adequate solutions. As a result, the number of companies with terrorism insurance remains very low and in any event policies generally exclude chemical, biological, radiological and nuclear (CBRN) attacks.
The OECD warned that government initiatives, including tax incentives and public-private partnerships, may be needed to fill the gap.