Terrorism Risk: A Constant Threat - 2014
Impacts for Property/Casualty Insurers
- The imminent expiration at the end of 2014 of the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA), is prompting increased dialogue between industry and government, a discussion that has gained critical importance in the wake of the Boston bombing. The question remains whether terrorism risk now, or ever, will be one that can be managed entirely within the private sector.
- The April 15, 2013 bombing near the finish line at the Boston Marathon marked the first successful terrorist attack on U.S. soil in more than a decade and left three dead and 264 injured. The attack adds to a growing list of international terrorism incidents that have occurred since 9/11, and underscores the fact that, while the risk is changing, terrorism is a constant threat for the foreseeable future.
- Should TRIPRA not be extended, industry experts expect the availability of terrorism insurance to be greatly reduced in areas of the United States that have most need for coverage such as metropolitan areas and other high risk locations. Pricing could also increase dramatically, leaving businesses and the U.S. economy vulnerable to any future terrorist attacks.
- Failure to focus on and prepare for the threat of terrorism will come at an enormous cost to the millions of individuals and businesses who rely on insurance contracts to offset the overall economic impact of a terrorist attack.
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