Although chemical, biological, radiological, and nuclear (CBRN) risks remain rare, a sizeable protection gap leaves individuals, businesses, and governments exposed to major incidents, according to a joint report by the Geneva Association and the International Forum of Terrorism Risk (Re)Insurance Pools (IFTRIP).
The report noted that the CBRN risk landscape is evolving. Rising geopolitical tensions, emerging technologies, and increasingly capable violent non-state actors are contributing to the growing likelihood and potential impact of malicious CBRN events.
In 2021, the UK Government warned that a successful terrorist CBRN attack is likely by 2030, reflecting growing concerns about escalating global CBRN threats and underscoring the need for sustained vigilance and strategic risk management.
The potential for severe loss accumulation has historically restrained private re/insurers from covering CBRN risks. The scale and uncertainty of potential losses far exceed what the re/insurance sector can safely underwrite. As a result, most traditional property and casualty (P&C) policies—and corresponding reinsurance contracts—either exclude CBRN-related losses or apply strict sublimits.
If such a risk were to materialise in a major incident, a substantial portion of economic losses would likely go uninsured, straining governments and disrupting the global economy.
“However, should a major incident occur, innocent victims would face significant financial hardship and disruption. Such an event would likely place significant burdens on the resources of national, regional, and local governments to organise a recovery, meet any shortfall in finance, and compensate victims, which in turn could trigger fiscal strains and possible macroeconomic instability,” the report stated.
To address these challenges, the report outlined initiatives to narrow the CBRN protection gap, improve risk management, and reduce the economic impacts of potential CBRN terrorist incidents.
It stressed that strong public-private risk-sharing is essential to close the protection gap and minimise economic disruption from future events.
Areas for future consideration include sharing best practices among national terrorism pools, including experiences using alternative funding arrangements, and sponsoring terrorism risk modelling education and training.
The report also suggested exploring expanded international reciprocation arrangements for terrorism pools, similar to those in the nuclear power industry, although the absence of standardised terrorism coverage and the national scope of existing pools remain key constraints.
Finally, it recommended fostering greater dialogue between re/insurers, governments, and international policymakers to address CBRN exposures and develop innovative mechanisms for risk sharing.
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