Demand for business interruption cover and other terror-related policies will grow as companies seek to protect themselves from the flow-on effects of increased political violence, KPMG says in a new report.

Companies want more sophisticated products than standard property damage covers, opening a new segment for insurers.

A recent wave of violence has highlighted the risks.

For example, the Paris terror attacks last November knocked €52 million ($87.5 million) off Air France-KLM’s revenue.

“As terrorism risk shifts away from large explosions towards ‘lone wolf’ shooter attacks, the demand for insurance is expected to change from property damage insurance to business interruption cover,” the report says.

“Market players will see growing demand from businesses that were usually not interested in the standard property damage cover, opening up whole new potential revenue streams.

“Insurers that will enjoy success in this market are the ones that offer innovative solutions and are up to speed with client needs.

“We believe the winners… will be brokers and carriers that manage to develop deep understanding of emerging risks with strong data and analytics capabilities and offer innovative propositions that span across all key segments.

“This will allow them to charge premium rates for value-add services rather than earning ever-diminishing returns for standard insurance cover.”

The political risk and crisis management insurance market was worth about $US8.1 billion ($10.5 billion) last year, KPMG says.

Credit and political, political violence and other crisis management risks are the major segments of the market.