Terrorism Risk: A Continuing Threat - 2012
This report, by Robert Hartwig, president of the Insurance Information Institute, and Claire Wilkinson, analyzes the evolving nature of international terrorism. For property/casualty insurers and reinsurers, the impact of the terrorist attack of September 11, 2001, was substantial, producing insured losses of about $32.5 billion, or $40.0 billion in 2011 dollars. Following the attack, insurers moved to exclude coverage. Only when the Terrorism Risk Insurance Act (TRIA) was enacted by Congress in November 2002 did coverage for terrorist attacks resume. Since its initial enactment in 2002 the terrorism risk insurance program has been revised and extended twice. The report, replete with charts, includes sections on: how insurers treat terrorism risk today; estimating potential terrorism losses; the cyber terrorism threat; the structure and coverage of the terrorism risk insurance program; aviation insurance for terrorism risks; and liability factors. The report concludes that over a decade later, 9/11 remains the worst terrorist act in terms of fatalities and insured property losses. A number of converging factors point to the fact that, while the risk is changing, terrorism is an evolving and ongoing threat for the foreseeable future. Failure to focus on and prepare for this threat 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. For property/casualty insurers, the increasing share of losses that they would have to fund in the event of a major terrorist attack on U.S. soil suggests that now is the time to take stock of their terrorism exposures.
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