NCPA - National Center for Policy Analysis


January 13, 2006

Currently, only commercial enterprises can be covered by terrorism insurance. Thanks to the Terrorism Risk Insurance Act (TRIA) of 2002, commercial insurers now offer terrorism coverage to businesses. They can now get property and casualty coverage -- including workers' compensation -- that extends to chemical, biological, radiological and nuclear events, says Dallas Morning News contributor Debra Decker.

However, TRIA is only temporary and was created to allow the private market time to develop sufficient depth for covering terror risk, which has not yet happened. In 2005, it was renewed for another two years, but what is really needed is a full report on how the insurance environment can best be structured to encourage individuals and businesses to take measures that might mitigate the effects of and deter catastrophic events, says Decker. For instance:

  • Should we require certain industries, like chemicals and shipping, to purchase terrorism risk insurance, which, if appropriately priced, would reward the more cautious firms with lower premiums?
  • Why does this commercial insurance act not cover domestic terrorism?
  • Is the coverage adequate?
  • And what about homeowners and their protection against chemical, biological, radiological and nuclear events?

Furthermore, attacks are certain to happen, just as catastrophes are; and even though homeowners who bought hurricane insurance were surprised when flooding was not covered, they will be even more surprised when and if they need radioactive cleanup, says Decker.

Source: Debra Decker, "Sitting ducks," Dallas Morning News, January 9, 2005.


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