Summary
A major terrorist attack could bankrupt companies and destabilize some economies, the Organization for Economic Cooperation and Development (OECD) warned in a report released just two days before the London bombings in July. Terrorism insurance market conditions regarding prices and extent of cover have improved substantially since 2001, when there was a drastic shrinkage of affordable insurance following the attacks on the US, says Cecile Vignial, principal administrator of financial affairs division at the OECD. No country can claim to be protected from the potentially devastating impact of future attacks; moreover, direct property losses may turn out to be small compared to global economic, social and political damage that may ensue, the OECD report says. Capital markets may in the future provide some additional sources of capacity to cover terrorism risks, the OECD says, although there have only been two transactions to date explicitly covering such exposure.
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Extract
Holes in the Safety Net
Four years after the terrorist attacks on the World Trade Center in New York and the Pentagon in Washington, DC, there are gaping holes in the insurance coverage available to compensate corporations for losses following any future large-scale attack, according to industry experts. The "9/11" attacks caused insured losses of more than $30 billion, making them the single most costly event ever recorded...
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