ABSTRACT
This chapter highlights how the insurance strategies employed in the decade after the 1992 bomb sought to manage and control terrorist risk in two main ways. First, through attempts to distribute the financial risk to terrorism throughout the national and global market place in order to remove liability from certain locales, and second, by drawing boundaries around high risk 'hot spots' and encouraging risk management measures and contingency planning as a condition of granting insurance coverage. Government involvement effectively aimed to spread the financial risk of further terrorist attack throughout the national economy, and away from the City markets. This reduced risk as the Government, given its powers, could absorb the potentially huge cost of terrorist attack. The chapter analyses the methods and success of the risk spreading mechanisms employed by the insurance industry in relation to terrorist risk in the 1990s. It highlights the impact of 9/11 on terrorism insurance mechanisms both within the UK and global markets.
