Insurance companies look at their payouts and the causes of death of their clients to set their risk factors. They set their rates acording to the risk.

That's how it's supposed to be done, but it ain't always true. There's a lot of amateur guesstimates involved, coloured by newspaper headlines and all that. I remember when a couple of IRA bombs in London, and the American tourists would all stay home to get killed in their own significantly more dangerous cities.

Anyway, since most travel insurance policies seem to have clauses excluding injuries caused by acts of war or terrorism already, what's all this about anyway?