Article Published by Jayleen R. Heft
As recent world events highlight, terrorism risk appears to be changing. Small groups and “lone wolf” terrorists are now a growing concern.
Companies and insurance clients may be questioning whether they are adequately insured for business interruption and other property losses.
Terrorism risk insurance
Prior to Sept. 11, 2001, when the World Trade Center and the Pentagon were attacked by terrorists, insurers provided terrorism coverage to their commercial insurance customers essentially free of charge because the chance of property damage from terrorist acts was considered remote, according to the Insurance Information Institute. After September 11, insurers began to reassess the risk.
Concerned about the limited availability of terrorism coverage in high-risk areas and its impact on the economy, Congress passed the Terrorism Risk Insurance Act. The act provides a temporary program that, in the event of major terrorist attack, allows the insurance industry and federal government to share losses according to a specific formula.
The Terrorism Risk Insurance Act was signed into law on Nov. 26, 2002, and renewed again for six years in January 2015. The new law is known as the Terrorism Risk Insurance Program Reauthorization Act of 2015.
Major property losses
Unfortunately, terrorism has been around for decades. Remember when IRA car bombs and hijacked airplanes where always in the news?
To view list of the 20 most costly terrorist acts by insured property losses, click here.
(Source of data: Swiss Re. Includes bodily injury and aviation hull losses. Updated to 2015 dollars by the Insurance Information Institute using the U.S. Bureau of Labor Statistics CPI Inflation Calculator.)