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 damage, including human casualties and cyber threats.
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, it is crucial for risk managers to utilize the favorable pricing to secure comprehensive coverage that addresses current risks, such as active-shooter events and cyber threats. The ongoing profitability has allowed the market to innovate and offer more tailored solutions. Additionally, the potential expiration of the federal Terrorism Risk Insurance Act (TRIA) in 2027 is a significant factor, as it could impact the availability of federal backstops. However, the industry is already preparing for this possibility, with contingency plans and robust standalone capacity in place.
What's Next?
As the expiration of the TRIA approaches, the insurance industry is closely monitoring legislative developments. While it is expected that Congress will extend the act, insurers are preparing for any changes by offering sunset clauses for long-term projects. Risk managers are encouraged to leverage advanced analytics to better quantify their exposure and tailor their insurance limits accordingly. The evolving landscape of terrorism threats necessitates a proactive approach to insurance coverage, ensuring that businesses are not only transferring balance-sheet risk but also enhancing their security preparedness and crisis response capabilities.
