GENEVA — Many companies in major markets such as the U.S. and Germany forgo terrorism insurance, leaving large parts of the economy financially exposed to possible future attacks, according to a report by the Organization for Economic Cooperation & Development.
The study, “Terrorism Risk Insurance,” said that despite the recent increase in terrorism risk coverage in the U.S. “probably more than half of commercial entities in the U.S. still remain uninsured.”
The study, released just prior to the London attacks, said that in Germany 1,100, or 2.8 percent, of 40,000 companies that qualified for terrorism coverage had contracted with a government-backed insurer.
The report by Paris-based OECD, which has 30 member nations and includes the U.S., said interconnections among companies “greatly increase their vulnerability to terrorism risk.” It contends that whatever their own level of protection against terrorism, “firms may still be affected by the failure of a weak link in the system in which they operate.”
Created as an economic counterpart to NATO, the OECD addresses the economic, social, environmental and governance challenges of the world economy. Its members compare policy experiences, seek answers to common problems and work to coordinate domestic and international policies.
According to the OECD report, a single “megaterrorist” attack could result in insured losses of $50 billion to $250 billion. If that were to occur, the OECD said the losses might exceed the joint capacity of private markets and governments in some countries “to compensate for them without threatening national economic stability.”