Terrorism activities have been on the rise in various parts of the world for the last century. They have impacted heavily on different sectors of economies of the affected countries. Insurance industries are the one most hit by terrorism activities. The November event in Mumbai, India, was one of the most memorable days in the minds of peace loving people in the world. The incident impacted heavily on the Indian economy. The tourism, hotel, and insurance industries were the worst hit by the Mumbai incident. This paper will concentrate on the impact that the Mumbai incident had on the entire insurance industry of India.

The insurance companies were forced by the results of the incidents to pay out high compensations for the affected victims. This impacted heavily on the insurance industries in India that were affected. They had to pay out much compensation at once, and this had a negative impact on their financial positions. As a result, the insurance companies were forced to raise the premium paid by various businesses on the monthly basis.

The economic effects of the Mumbai attack caused financial crisis that insurance companies found themselves in after the incident. The attack produced financial depression among the insurance companies. This meant that there were no new job opportunities in the insurance companies, as they had to take some time before they could fully recover from the incident.

The disbursements were higher than at any given time in history. FEMA was forced to interfere, to lend a helping hand to businesses that were affected by the unfortunate incident. This meant that FEMA realized high amount of funds from its reserves. The incidents had a notable impact on the FEMA resources, as they reduced drastically.

The impact of the Mumbai attack was destructive to the country’s economy; risk premium paid by various businesses, located in Mumbai, rose drastically. The entire insurance industry felt the impact of the incident, as it suffered financial depression after the attack.

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