What's Happening?
Terrorism insurance pricing in the United States is currently at an all-time low, despite increasing geopolitical tensions and domestic extremism. According to Peter Bransden, head of crisis management for North America at Willis, the low pricing is a result
of the supply and demand dynamics in the insurance market. The U.S. standalone terrorism insurance capacity has grown to over $2 billion, with additional support from London, leading to increased competition among insurers and a decrease in prices. The U.S. Terrorism Insurance Index reported an average price reduction of 10.4% in the fourth quarter of 2025. Despite the low prices, the threat of terrorism has not diminished, and the insurance market has evolved to cover a broader range of risks beyond physical property damage, including human casualties and reputational exposures.
Why It's Important?
The low pricing of terrorism insurance in the U.S. presents an opportunity for businesses to enhance their coverage against a variety of modern threats. While the market remains profitable, the evolving nature of terrorism risks necessitates comprehensive coverage that includes not only property damage but also human and reputational risks. The current pricing environment allows risk managers to invest in more robust coverage options, which can include protection against events like active-shooter incidents. Additionally, the potential expiration of the federal Terrorism Risk Insurance Act (TRIA) in 2027 adds urgency for businesses to secure long-term coverage solutions. The insurance market's ability to innovate and adapt to new threats is crucial for maintaining security preparedness and crisis response capabilities.
What's Next?
As the expiration of the TRIA approaches in 2027, the insurance industry is preparing for potential changes in federal backstop provisions. While Congress is expected to extend TRIA, contingency planning is underway to ensure continued coverage. Insurers are offering sunset clauses for long-term projects to address any changes in federal support. Businesses are encouraged to use the current favorable pricing to bolster their terrorism and political violence coverage, ensuring they are prepared for a range of potential threats. Advanced analytics are being utilized to better quantify exposure and tailor insurance limits to meet the specific needs of organizations.
