BOMA survey reveals shortcomings of terrorism insurance coverage

September 27, 2002—The Building Owners and Managers Association (BOMA) International has released the results of its national survey on terrorism insurance coverage. Noteworthy findings include:

• More than one quarter of survey respondents were unable to obtain terrorism insurance at any cost. Of the remaining 73 percent who have been able to secure coverage, a full 80 percent incurred higher premiums, caps on coverage, higher deductibles, cancellation clauses of 60 days or less, and/or exclusions for chemical, biological, or radiological acts.
• The premium increases that building owners incurred ranged from an average low of about 20 percent to a high of 200 percent.
• 80 percent of respondents are planning to pass at least some of the cost on to their tenants.
• When asked which factor negatively affected their ability to purchase terrorism insurance, 69 percent indicated that it was more difficult to purchase insurance for portfolios due to the building’s geographic location.
• When it came to negotiating more favorable rates and/or terms, almost half of all survey respondents cited that nothing helped, while 28 percent cited that providing insurers with detailed building data and insurance history helped. Twenty-four percent cited that increased security helped somewhat. Other factors mentioned included long relationships with insurers and timing of renewals.
• 27 percent of survey respondents are either self-insuring or “going bare” for part or all of their portfolios due to the lack of terrorism insurance available.

“This survey clearly confirms that insurance coverage for terrorism events is largely unavailable at any price, and the product that is available is faulty and does not meet the needs of building owners and managers,” said BOMA International President Larry F. Soehren. “As we continue to address these issues on Capitol Hill, it is absolutely necessary for Congress to step forward swiftly to provide a federal backstop in the events of future terrorist attacks.”

For more information, contact BOMA International.