Lloyd's Chairman Lord Levene says the insurance industry needs to work closely with governments and the business community to deal with emerging areas of terrorism risk. He believes public-private partnerships are the best way of managing modern threats to the world economy.

"The partnerships that work best tend to be those which involve close consultation between governments and insurers," he told delegates to the Royal United Services Institute for Defence and Security Studies.

But he says such co-operation will work only if businesses increase their knowledge of the risks involved.

"The majority of business leaders believe that political violence will increase worldwide over the next five years," Lord Levene said. "But only one in three say their companies have a strong understanding of these risks."