Terrorism insurance
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Terrorism insurance is insurance purchased by property owners to cover their potential losses and liabilities that might occur due to terrorist activities.
It is considered to be a difficult product for insurance companies, as the odds of terrorist attacks are very difficult to predict and the potential liability enormous. For example the September 11, 2001 attacks resulted in an estimated $31.7 billion loss. This combination of uncertainty and potentially huge losses makes the setting of premiums a difficult matter. Most insurance companies therefore exclude terrorism from coverage in Casualty and Property insurance, or else require endorsments to provide coverage.
Netherlands
Insurance payments related to terrorism are restricted to a billion euro per year for all insurance companies together. This regards property insurance, but also life insurance, medical insurance, etc.
US
On November 26, 2002 President George W. Bush signed into law the Terrorism Risk Insurance Act (TRIA) which created a federal backstop for insurance claims related to acts of terrorism. The Terrorism Risk Insurance Act is intended as a temporary measure to allow time for the insurance industry to develop their own solutions and products to insure against acts of terrorism. The Act is set to expire December 31, 2005.
External Links
- Catastrophes (http://www.iii.org/media/facts/statsbyissue/catastrophes/) from the Insurance Information Institute (Scroll down half way to see a break down of 9/11 losses)