The Boston Marathon bombs will prompt price increases and tighter capacity in terrorism cover for big sports and entertainment events, SRS Underwriting Agency CEO Paul Lynam has warned.

Three people were killed and more than 170 wounded last week when two bombs exploded near the race finish line, sparking a huge manhunt which ended with the death of Tamerlan Tsarnaev and the capture of his brother Dzhokhar.

Terrorism insurance – underwritten for SRS by Beazley – is part of most cancellation policies and can often be extended at additional cost, Mr Lynam says.

“It is likely there will be an interim increase in market pricing for inclusion of basic and/or broadform terrorism cover for high-profile sporting and entertainment events, and… there may be a tightening of capacity.”

Insurers are unlikely to stop providing cover because “the historical trend suggests exposure to such events is manageable”, according to Mr Lynam.

But underwriters must understand what extra security measures event organisers will implement, he says.

“This is especially true for marathons, where it is not possible to screen spectators.

Underwriters may also require more detailed assessments by independent security advisers of the risks faced.”

In Boston most of the property damage appeared to occur within about six metres of the blasts, with insured property losses unlikely to exceed $US1 million ($970,092), according to Gordon Woo from US catastrophe risk modeller RMS.

However, business interruption caused by security restrictions after the attack may be a larger source of claims.

“The shortage of terrorism insurance cover in the years after [September 11 2001] led to the securitisation of cancellation risk of the 2006 [soccer] World Cup,” Dr Woo said.

“So while the property insurance loss is small, the Boston Marathon bombing may well have a significant influence on the terrorism insurance market.”