The Legacy of 9/11

Seven years after September 11, 2001, the insurance and reinsurance market is still adjusting to a world where major catastrophic terrorism can occur. At the end of 2007, President Bush reauthorized the Terrorist Risk Insurance Act (TRIA). The authorization extends the Act until 2014. It is not clear whether an independent market for terrorist insurance is commercially feasible without governmental reinsurance backing. The U.S. Treasury implements the program.

In an excellent summary of the challenges faced by businesses and insurers in trying to mitigate terrorist threats, the Insurance Information Institute notes that broker Marsh has reported that in a recent survey by the broker 59% of its clients purchased terrorist coverage. This is compared to 27% in 2003. Mass terrorist attack threats have been identified in the past seven years and some, like the Madrid train bombing, have been carried out. While the threat is random and efforts to stop terrorism are greatly improved since 9/11, terrorism is still a threat. Potential losses are catastrophic. It is estimated that insured losses from 9/11 exceeded $36 billion in today's dollars.

On September 10, 2001, a commercial property policy sold to a business often included coverage for intentional terrorist acts by others. Often this was included as throw in coverage. Often without a real premium associated. That world simply does not exist anymore.