Yemisi Izuora/Agency Report
This week’s fatal suicide bombings in Brussels do not represent a significant increase in terrorism risk for business, but they could see insurers cap cover offered in major European cities.
Tuesday’s terrorist attacks at Brussels Zaventem airport and Maelbeek metro took over 30 lives and injured hundreds. The blasts caused significant damage to the airport terminal and resulted in major rail and air transport disruption for days after the event. Islamic State has claimed responsibility for the attacks.
Despite the disruption and cost of human life, this week’s events in Brussels do not point to a significant increase in terrorism risk for European businesses, according to David Lea, senior analyst for western Europe, global political risk at Control Risks.
“For some time we’ve felt that events such as those we’ve seen in Brussels this week and in Paris in 2015 were credible, real threats in Europe, and we’ve assessed that risk as such. The fact that they’ve happened changes that to an extent, but only to a limited extent. The threat actors have always been around, and always had the capability and intent to do this kind of thing,” he said.
Mr Lea believes that other major cities in Europe, including those in the UK, Germany, Netherlands, Scandinavia and Italy, are also exposed to the risk of terror attacks. He does not subscribe to the media narrative that Belgium is a particular hotbed for Islamist terrorists and jihadists.
“The focus of Islamist extremists will shift as people move and as members of cells are arrested and killed. For that reason we do not see any merit in an increased risk rating for Brussels and Paris when compared with other major European cities,” said Mr Lea.
“It is credible that there could be further attacks in Europe, but I don’t see such attacks occurring on a regular basis. But we do now see them more often than in 2010 to 2014, which now seem relatively light in terms of the numbers and severity of attacks,” he added.
It is too early to estimate the likely loss from the attacks in Belgium and the impact on the insurance market. However, the country does have a voluntary terrorism insurance pool, the Terrorism Reinsurance and Insurance Pool (TRIP).
TRIP provides up to €1bn of property and liability terrorism insurance in each calendar year.
The pool is reinsured into the standalone terrorism market and backed by the Belgium government. Participation in the pool is not compulsory, but approximately 95% of insurers operating in Belgium contribute.
The bombing in Brussels is not likely to lead to a hardening of the standalone terrorism insurance market, according to Tarique Nageer, terrorism placement advisory and leader in Marsh property practice in New York. However, there could be implications for cover and rates in some European cities, he said.
“The insurance market is very resilient to these types of events. There has been an uptick in the frequency of attacks, but the terrorism market as a whole is flush with capacity and this has been driving prices down. Despite recent events, I would not expect this softening market trend to be disrupted,” said Mr Nageer.
However, terrorism insurers are likely to be more cautious of European cities and ask prospective policyholders more questions about security arrangements in the future, according to Mr Nageer.
Terrorism insurance capacity is already limited, and at a premium, in some city centres with the highest exposures and where there are large concentrations of businesses, such as London and New York, noted Mr Nageer. It is likely that insurers will now extend so-called Tier 1 cities to include more European cities, he said.
“With the trend towards more terrorist attacks in developed countries, and with shorter time frames between such attacks, insurers could place caps on certain cities in Europe. There could be more pressure on capacity and rates in a greater number of European cities,” he said.
According to Mr Nageer, the events in Brussels should be seen in the context of a two-year trend of increased terrorism activity in western cities.
Notable attacks have occurred in Sydney and Toronto, and more recently Paris, San Bernardino and Turkey, noted Mr Nageer.
The past two years has also seen a move away from large-scale property damage events, in favour of smaller softer targets where there is less security presence. The attacks in Brussels do not yet suggest a departure from this trend, although they were notable for the extent of property damage, Mr Nageer said.
It is too early to draw conclusions about any potential change in the terrorist operating model, according to Mr Lea.
“I think it underlines the fact that terrorism and counterterrorism is a cat and mouse game-the trend from 2011 to 2015 was very much one of moving away from improvised explosive device (IED) attacks in western jurisdictions and towards firearms,” he said.
“It’s too early to describe this as a new trend, but perhaps the attackers may have been taking advantage of too great a focus on the active shooter scenario at the exclusion of all else. Let’s not forget that suicide belts featured strongly in Paris too-it wasn’t just about the firearms,” he added.
Mr Lea also believes that this week’s attack was potentially carried out by the last big-hitting members of a cell, whose access to material will have been increasingly limited.
Mr Lea noted that actions by the French and Belgium security services, as well as the death of terrorists during the attacks, have largely depleted the cell believed responsible for the attacks in Paris and Brussels this year. There are a surprisingly large number of people prepared to support the terrorist cause, however there is only a relatively small number with the capability, Mr Lea said.
Most companies are not likely to be direct targets and terrorists will probably continue to target the general public, according to Mr Lea.
However, businesses should review how they interact with the public and their access control, as well as response procedures.
Aviation and transport are primary targets for terrorists and this is likely to remain the case during the Islamist terrorist threat, which is set to continue for decades, according to Mr Lea.
According to Florian Otto, head of Europe at risk analysis company Verisk Maplecroft, the threat from Islamic State will challenge European governments to strike a balance between guaranteeing the security of citizens and stifling normal life and business activity.
“One key priority for European governments is to reassure their populations, which will be done by deploying more police and in some cases members of the armed forces to maintain public security.
We’ve seen this in the aftermath of the Paris attacks and yesterday, but also in more permanent measures, such as those announced by the Metropolitan police earlier this year to boost its terrorism response capabilities by increasing the number of firearms officers,” said Mr Otto.
However, the ability to respond quickly and effectively to a terrorist attack is essentially a last line of defence, said Mr Otto.
“Intelligence gathering, sharing and analysis are central to making and keeping European populations safe, and yesterday’s events will refocus attention on improving both national and EU intelligence capabilities. Yesterday’s attacks could see the idea of a joint EU intelligence service back on the agenda,” he said.
Meannwhile, the Federation of European Risk Management Associations (Ferma ) and Belgian risk management association Belrim have sent their condolences to the friends and families of those killed and injured in this week’s terror attacks in Brussels and stressed the importance of risk management to counter the threat.
“We have no doubt that these attacks, coming as they do after those in Paris in 2015, focus attention on the importance of managing this risk for the security of our organisations and society as a whole,” said the associations.
President of Ferma and Belrim board member Jo Willaert added: “The senseless, devastating attacks in Brussels on 22 March…were not just an attack on Belgium, but an attack on the symbol of Europe. Terrorism is a threat for all of our societies, and union and solidarity in the international community are fundamental. These attacks show how important it is for us to manage these risks to the security of our organisations and society as a whole.”
“A united Europe, determined not to give up the values of freedom and democracy without fear, religious hatred and racism, is the only answer to this barbarity.
We will never accept that these actions undermine the will of all Europeans to live and work together,” he said.