Insurers must review the way business interruption covers and other policies are structured as terrorists increasingly target maximum economic damage over loss of lives, reinsurance broker Guy Carpenter says.

“The industry needs to look beyond what it currently deems the insured loss component of a terror-related attack and consider the wider-reaching and longer-term financial fallout,” MD Emma Karhan said.

“The potentially extensive business interruption repercussions from these attacks are not being adequately covered by the market currently, and this needs to be addressed.”

A Cambridge University study estimates the November attacks in Paris cost the French economy about $US9.5 billion ($12.6 billion) in potential financial loss, rising to $US12.7 billion ($16.9 billion) two years after the event with knock-on effects taken into account.

“The aftermath of these events can be particularly challenging for smaller companies and sole traders,” Ms Karhan said. “This is where the insurance industry needs to assume a more prominent role – providing immediate financial support to those businesses facing disruption and imminent closure.”

Guy Carpenter is working on models to assess damage and impact fields that reflect the potential effects of a terror attack.

“The role of the (re)insurance industry is… to help mitigate economic disruption post loss, whether that be at the individual business or sector level,” Ms Karhan said.

“While we can never fully understand the behavioural factors underpinning terror attacks, we can look to more accurately calculate the financial impact through a better understanding of the physical damage caused and the subsequent business interruption and liability losses.”