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NCJ Number: 193766 Find in a Library
Title: Terrorism Insurance: Rising Uninsured Exposure to Attacks Heightens Potential Economic Vulnerabilities
Author(s): Richard J. Hillman
Date Published: February 27, 2002
Page Count: 20
Sponsoring Agency: NCJRS Photocopy Services
Rockville, MD 20849-6000
US Government Accountability Office
Washington, DC 20013
Publication Number: GAO-02-472T
Sale Source: US Government Accountability Office
P.O. Box 37050
Washington, DC 20013
United States of America

NCJRS Photocopy Services
Box 6000
Rockville, MD 20849-6000
United States of America
Document: PDF
Type: Legislative Hearing/Committee Report
Format: Document
Language: English
Country: United States of America
Annotation: This document discusses the potential exposures insurance companies could face in the event of another terrorist attack such as September 11.
Abstract: Both insurers and reinsurers have determined that terrorism is not an insurable risk at this time, based on the continued uncertainties about the frequency and magnitude of future attacks and the warnings of new attacks to come. Congress has not adopted legislation on what the Federal Government can do to keep commercial insurance companies involved in providing terrorism insurance. Uncertainty and concerns continue in both the insurance industry and the economy over the issue of terrorism insurance. Because insurance companies believe that neither the frequency nor the magnitude of future terrorist losses can be estimated, they are withdrawing themselves from the market. Insurance for losses from terrorism is disappearing, particularly for large businesses and those perceived to be at some risk. This withdrawal is happening fastest among reinsurers. Direct commercial P/C insurers’ withdrawal has been slower and less complete because of regulatory constraints and legal requirements in some States that preclude insurers from excluding terrorism from coverage for workers’ compensation and for fire. In the absence of terrorism insurance, another terrorist attack would dramatically increase direct losses to businesses, employees, lenders, and other noninsurance entities beyond those resulting from September 11th. Should the Government decide to intervene after a future attack, it would do so without readily available claims-processing and payment mechanisms that exist in the insurance industry. There are some indications that some sectors of the economy--notably real estate and commercial lending--are beginning to experience difficulties because some properties and businesses are unable to find sufficient terrorism coverage, at any price. These difficulties are likely to increase as more insurance contracts come up for renewal over the next year. The resulting economic drag could slow economic recovery and growth. 10 footnotes, appendix
Main Term(s): Business insurance; Economic analysis; Socioeconomic impact of terrorism
Index Term(s): Business crime costs; Cost analysis; Economic planning; Impact prediction; Policy analysis; Property damage; Trend analysis
Note: Testimony before the Subcommittee on Oversight and Investigations, Committee on Financial Services, House of Representative. Downloaded March 1, 2002
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