Magazine article Security Management

Terrorism Insurance Called Inadequate

Magazine article Security Management

Terrorism Insurance Called Inadequate

Article excerpt

WITHOUT LEGISLATION to extend it, the Terrorism Risk Insurance Act (TRIA) is set to expire at the end of the year. That may not be a bad thing, according to the Treasury Department, which told Congress that "continuation of the program in its current form is likely to hinder the further development of the insurance market by crowding out innovation and capacity building."

A report published by the RAND Corporation's Center for Terrorism Risk Management Policy takes the opposite view, saying that deductibles should be reduced and cover-age expanded.

For one thing, the authors--Peter Chalk, Bruce Hoffman, Robert Reville, and Anna-Britt Kasupski--write that "take-up rates" for terrorism insurance are too low--not enough businesses are buying terrorism insurance. A significant attack will "likely lead to widespread uninsured losses, which would slow recovery and magnify the economic consequences."

The low take-up rates for businesses are particularly troubling, according to the authors, because of al Qaeda's stated goal of hitting economic targets. …

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