INSURANCE INFORMATION INSTITUTE
New York Press Office: (212) 346-5500; firstname.lastname@example.org
NEW YORK, September 10, 2009
— Terrorism will remain a serious and continuous threat to the United States in the decade ahead and proposed changes that would reduce support for the federal Terrorism Risk Insurance Program in 2011 would have a far-reaching effect on the availability and affordability of terrorism risk insurance, according to the Insurance Information Institute
“The nine-year anniversary of September 11 is an important reminder that any changes to the law introduce a measure of market uncertainty which in turn could lead to pricing and capacity volatility, problems that the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) with its seven-year extension of the law was designed to end,” said Robert P. Hartwig, I.I.I. president and an economist. The program in its current form is scheduled to run through 2014. “TRIPRA makes terrorism insurance coverage available and affordable for many key projects that might otherwise never get beyond the drawing board. The last thing the fragile U.S. economy needs is for any of these projects to be derailed,” added Hartwig.
According to Risk Management Solutions
(RMS), a risk modeling firm, there have been 33 known macro-terrorism plots perpetrated in the U.S. in 2010, with six foiled plots occurring in the span of the last 12 months. Since 2001 some two dozen potential terrorist plots have been uncovered in the United States, mostly targeting New York or Washington. Indeed, a September 2010 report
issued by the Bipartisan Policy Group
’s National Security Preparedness Group (which includes former members of the 9/11 Commission), indicates that the threat of terrorism is now more diverse than ever, with the risk no longer confined to foreign threats. Specifically, the report concludes that Al Qaeda and its allies have now established “an embryonic terrorist recruitment, radicalization and operational infrastructure” within the United States itself. TRIPRA wisely did away with the distinction between foreign and domestic acts of terrorism that was present in earlier versions of the program between 2002 and 2007.
In July 2008, RMS put potential insured losses from a terrorist attack in the U.S. at $1.6 billion, an increase of 8 percent from the previous year. RMS said terrorism targets are more likely to be in the commercial or private sector, such as sports stadiums, now that governments’ counter-terrorism efforts have been stepped up. They recently noted that places of worship and their congregations are targeted by terrorist groups, such as Al Qaeda. Most at risk are churches or synagogues. Apart from adding a new target category, there were changes made in the city tiers as well. The cities of Dallas in Texas, Jersey City and Newark in New Jersey are at increased risk. While these cities may not be a target of the magnitude of New York City, being a larger metropolitan city in the U.S. makes them attractive targets.
“The 9/11 attack was the largest loss in the history of the global insurance industry until Hurricane Katrina in 2005,” said Hartwig. “As construction moves ahead on the new World Trade Center site, insurance claims dollars continue to play an essential and highly visible role in rebuilding lower Manhattan.”
The 9/11 attack produced insured losses of $39.4 billion (adjusted to 2009 dollars), including property, business interruption, aviation, workers compensation, life and liability insurance claim costs as shown in the graph below.
SEPTEMBER 11 INDUSTRY LOSS ESTIMATES (1)
(1) Loss total does not include NYC March 2010 settlement of up to $657.5 million to compensate about 10,000 Ground Zero workers.
(2) Sum of segment totals may not equal overall total due to rounding. Adjusted to 2009 dollars using Bureau of Labor Statistics (BLS) inflation calculator.
Source: Insurance Information Institute.
A total of 2,976 people perished in the September 11, 2001, terrorist attacks in New York, Washington, D.C., and Pennsylvania, excluding the 19 hijackers. Total insured losses (including liability losses) from the terrorist attacks on the World Trade Center in New York City and the Pentagon are about $39.4 billion (in 2009 dollars), including property, life and liability insurance claim costs. The total loss does not include the March 2010 settlement of up to $657.5 million announced by New York City officials and plaintiffs’ lawyers, which was designed to compensate about 10,000 workers whose health was damaged during the rescue and cleanup at the WTC. (Loss estimates may differ from estimates calculated by other organizations.)
September 11 was the worst terrorist attack on record in terms of fatalities and also insured property losses, which totaled about $23 billion (in 2009 dollars). About two-thirds of these losses were paid for by reinsurers, companies that provide insurance for insurers.
Reporters covering the 9/11 anniversary can contact the I.I.I.’s Loretta Worters at 917-620-0982 to set up interviews.
THE I.I.I. IS A NONPROFIT, COMMUNICATIONS ORGANIZATION SUPPORTED BY THE INSURANCE INDUSTRY.
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