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LONDON--(BUSINESS WIRE)--The majority of European companies feel underprepared for emerging risk and terrorism and political violence is their top concern, according to new research by ACE published today. However only 7% of companies have fully comprehensive insurance cover in place for terrorism and political violence and 34% have none at all.

The research focuses on six areas of emerging risk that ACE, as a global insurance specialist, has identified as increasingly relevant for 21^st century businesses*. Around a third (32%) of European companies surveyed cite terrorism and political violence as the most important risk concern for their business. The second and third most prominent concerns are environmental risk and multinational/export risk, ranked as important by 30% and 27% respectively. In four of the six risk categories surveyed, over half of companies say they feel somewhat or completely unprepared to manage these risks. These are terrorism and political violence risk, directors’ and officers’ liability risk, IT and cyber risk and business travel risk.

The research also discloses that the chief executive or chief operating officer has formal responsibility for risk management at 50% of European companies. The countries with the highest levels of CEO oversight are Germany, Spain and the UK.

In the wake of events such as the ‘Arab spring’ and the on-going risk of social and political turbulence across Europe, over half of respondents (54%) say they feel underprepared to deal with the threat of terrorism and political violence. Furthermore, only 46% have crisis management procedures in place to help manage their terrorism and political violence exposures. The research also reveals that 51% of those surveyed rely on their insurer or insurance broker for guidance and information on terrorism and political violence risk.

The last five years have seen a marked shift in perception regarding terrorism and political violence risk with 64% of companies saying that it is an in increasingly significant issue for European business. Around 45% of executives say they have become more concerned about the risks to their own business, with 44% of these pointing to the negative economic outlook and 44% to recent terrorist events (such as those in Oslo and the Middle East) as the main drivers. Geopolitical tensions (such as volatile relations between Iran and the West) are also a driver for over a third (38%) of those who report increased concern.

The research highlights marked regional variations. In Italy, 55% of companies believe that their own organisation is at risk from terrorism and political violence, the highest across the region, closely followed by the UK (53%). Companies in Germany feel the least exposed (36%). Companies in France and the UK (55% and 52% respectively) are most likely to cite recent terrorist attacks as a driver for their increased concern.

According to the research, over a third of companies (34%) have no insurance coverage in place for either terrorism or political risk. The different dynamics in markets such as France, where it is mandatory for insurers to provide this cover as part of their standard property and casualty policies, contribute to the low levels of insurance purchased. From an industry perspective, the sectors with the highest proportion of uninsured businesses are healthcare, manufacturing and retail. Legal organisations emerge as the most comprehensively insured.

Andrew Kendrick, Chairman, ACE European Group said: “Our research indicates that the majority of European companies feel underprepared to deal with the emerging risks they face. It also points to a number of steps that companies can take to increase preparedness. Taking formal responsibility at board level for driving a culture of emerging risk awareness throughout the organisation and putting in place crisis management plans to prepare for key scenarios are two of these. In addition, the research suggests that companies would welcome more information from their insurance market partners on the changing risk environment and the insurance solutions that are available.”

Piers Gregory, Terrorism Underwriting Manager, ACE European Group said: “It is notable that only 7% of European companies in our research have comprehensive cover for terrorism and political violence risk. A further one in five believes that these risks are covered under another policy, but our experience shows that this is often not the case. Insurers and brokers must work together to help European businesses understand the potential gaps that exist in their insurance cover and take informed decisions on insurance purchasing.”

ACE has conducted this research as part of a survey of over 600 European companies, on a range of emerging risk issues, with more findings to be released in the near future.

*The six risk areas researched are: terrorism and political violence risk, environmental risk, multinational/ export risk, IT and cyber risk, directors’ and officers’ liability risk, and business travel risk.

Summary of key findings

About ACE:

The ACE Group is one of the world’s largest multiline property and casualty insurers. With operations in 53 countries, ACE provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. ACE Limited, the parent company of the ACE Group, is listed on the New York Stock Exchange (NYSE: ACE) and is a component of the S&P 500 index.

Additional information can be found at: www.acegroup.com/eu

Notes to editors:

The research for ACE Europe was carried out between: 13 / 04 / 2012 and 03 / 05 / 2012 by Opinion Matters who spoke to 606 European Risk managers / CROs / CFOs / COOs / people responsible for buying insurance from companies with turnover of £500 million+ for the UK and their equivalent in the European countries.

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