Category Archives: Terrorism Risk

Terrorism Insurance: Request for Comments

A newly released I.I.I. white paper observes that recent developments such as the attempted SUV bombing in New York City’s Times Square and the March 29 Moscow subway bombings are propelling terrorism into the headlines once more and reaffirm the risk facing insurers.

With this in mind, we note that the U.S. Department of the Treasury has issued a federal notice seeking comments on the long-term availability and affordability of terrorism insurance.

Hat tip to National Underwriter which reports on the Treasury’s request for feedback here.

In the notice, the Treasury said the Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007 (which extended TRIA until December 31, 2014), requires the President’s Working Group on Financial Markets to perform an ongoing analysis regarding the long-term availability and affordability of insurance for terrorism risk.

The working group is required to submit a report to Congress this year and another report in 2013. It is conducting its analysis in consultation with the National Association of Insurance Commissioners (NAIC), representatives of the insurance industry, the securities industry and representatives of policyholders.

These parties have 45 days to submit comments either electronically through the Federal eRulemaking Portal or by mail to the Treasury’s Office of Financial Institutions Policy.

Meanwhile, a new report by Guy Carpenter reveals that as the ninth anniversary of the 9/11 attacks approaches, the threat from terrorism continues to pose a risk to the re/insurance industry. Guy Carp says:

The nature of the threat has changed since 2001, but terrorism remains a constant and serious risk with global recorded terror incidents at historic highs.†

New World Trade Center Settlement Approved

A federal judge has approved a renegotiated settlement to compensate about 10,000 workers whose health was damaged during the rescue and clean up at the World Trade Center following the terrorist attack of 9/11.

The new $712.5 million settlement increases payouts to those injured and caps the fees going to plaintiffs’ attorneys.

It comes a little more than two months after U.S. District Judge Alvin K. Hellerstein ordered the parties to renegotiate a deal saying that too much of the original $657.5 million settlement was going to plaintiffs’ attorneys and not enough to the victims.

Under the new deal plaintiffs’ attorney fees are capped at 25 percent, adding $50 million to the fund, the WTC Captive Insurance Co is paying an additional $50 million to $55 million in cash, and New York City is waiving certain workers’ compensation liens. As a result of those savings, the payout to WTC plaintiffs will increase by up to $125 million.

In a statement WTC Captive Insurance Co president and CEO Christine LaSala said:

This settlement gives the plaintiffs immediate, fair and reasonable compensation, certainty and closure after years of protracted and costly litigation that will continue without this agreement.†

La Sala also noted that the settlement establishes objective criteria, based upon accepted medical standards, to assess the type and severity of each illness alleged in order to achieve a fair value for each claim.

Under the settlement those suffering debilitating respiratory illnesses such as severe asthma, could receive between $800,000 and more than $1 million. Approximately $1.5 million could go to compensate death claims.

Plaintiffs who have no qualifying injury, but have a legal claim for fear of becoming sick, will receive $3,250. A special insurance policy through MetLife will provide coverage for certain blood and respiratory cancers diagnosed during the coverage period, paying a benefit of up to $100,000.

Judge Hellerstein will hold a public hearing June 23 to hear from parties to the settlement. For more on this story check out a New York Law Journal report via law.com and an online article at National Underwriter. Check out the new I.I.I. paper Terrorism Risk: A Reemergent Threat.

Renewed Terrorism Threat

The thwarted car bomb attack in New York City’s Times Square on Saturday night is the latest in a series of incidents (such as the March 29 Moscow subway bombings and the thwarted Christmas Day bombing on board a U.S.-bound flight) that are propelling terrorism into the headlines once more and reaffirm the risk facing insurers.

The Wall Street Journal reports that counterterrorism experts say the car bomb attempt and other recent plots against U.S. targets may indicate a shift to small-scale strikes that are harder to detect in advance. While investigators have said the crude explosives don’t indicate much explosives expertise, the WSJ article cites counterterrorism experts saying that the construction of the car bomb was similar to that used in an attempted attack on a British nightclub in 2007 and also bears resemblance to plans for further al Qaeda-linked attacks using vehicles packed with gas cylinders.

A New York Times article cites research by the terrorism response center in Maryland showing that from 1970 through 2007, terrorists used car bombs at least 1,495 times. The center tracked 876 in the Middle East and North Africa, 212 in Western Europe and 163 in South Asia.

The reemerging threat of terrorism and its impacts for property/casualty insurers is the subject of a recently released Insurance Information Institute (I.I.I.) paper. It observes that while nearly nine years may have passed since the September 11 terrorism attack, terrorism is a reemerging and perhaps growing threat for the decade ahead. Check out further I.I.I. facts and stats on terrorism.

Terrorism: A Reemergent Threat

A Qatari diplomat earlier this week triggered a mid-air emergency when he allegedly sneaked a smoke aboard a flight to Denver, resulting in the scrambling of F-16 fighter jets and subsequent passenger delays lasting hours. The incident has sparked numerous stories, including today’s New York Times article titled Few Worry About Overreaction. The gist of the NYT report is that while the possibility of overreaction to perceived threats is by now a familiar problem in the age of terrorism, in this case there was little second-guessing of the broad security alert in response to a situation that ultimately turned out to have posed no significant threat. Just yesterday we published a paper reviewing the reemerging threat of terrorism and its impacts for property/casualty insurers. In it we discuss how recent developments such as the March 29 Moscow subway bombings and the thwarted Christmas Day bombing on board a U.S.-bound flight are propelling terrorism into the headlines once more and reaffirm the risk facing insurers.  The paper  observes that while nearly nine years may have passed since the terrorist attack of September 11, 2001, a number of converging factors point to the fact that terrorism is a reemerging and perhaps growing threat for the decade ahead. The report can be accessed on the Insurance Information Institute (I.I.I.) Web site at www.iii.org/paper/Terrorism-040810/. Check out  I.I.I. facts and stats on terrorism.