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Who was 9/11's "Economic First Responder"?

Now at the 10th anniversary of September 11, 2001, like the bombing of Pearl Harbor on December 7, 1941, it is a day that lives on in infamy for a new generation of Americans. But 9/11 was different in the sense that the attacks targeted not only a military site—the Pentagon building in Virginia—but an internationally recognized building which was the workplace for thousands of civilians, New York City’s World Trade Center.  Nearly 3,000 people died on 9/11 in Virginia, New York and Pennsylvania as a group of terrorists hijacked four commercial airplanes, and turned them into weapons of mass destruction.  This kind of terrorism not only seeks to destroy innocent lives but also our entire economy and way of life.


"The 9/11 attack was the largest payout in the history of insurance until Hurricane Katrina in 2005," said  Dr. Robert Hartwig, economist and president of the Insurance Information Institute. "Insurers became the nation's economic 'first responders' and as construction progresses on the site of the former World Trade Center, insurance claims dollars continue to play an essential and highly visible role in rebuilding lower Manhattan while also mitigating the overall economic impact of the 9/11 attack."  SEE VIDEO: Ten Years Later: Dr. Robert Hartwig Discusses the Insurance Impact of 9/11


For property/casualty insurers and reinsurers 9/11 was, at the time,  the largest cumulative claims payout in global insurance history, producing insured losses of about $32.5 billion, or $40 billion (in 2010 dollars). That dollar amount has since been exceeded only once, by Hurricane Katrina in 2005, which produced losses of more than $45 billion (in 2010 dollars). September 11 related losses were paid out across many different lines of insurance, including property, business interruption, aviation, workers compensation, life and liability. Moreover, terrorism risk insurance, a product that was almost nonexistent in the U.S. prior to 9/11, is in 2011 an essential coverage for millions of American businesses.


High rise buildings, dams, power plants, sports stadiums, shopping centers – how can investors commit $billions to these projects if they can’t insure the risk of loss by terrorism? 

"The fact that acts of terrorism are intentional and that the frequency and severity of attacks cannot be reliably assessed makes terrorism risk extremely problematic from the standpoint of insurers," said  Dr.  Hartwig. 

Standard Commercial property and liability insurance policies exclude coverage for “War”.  After 9/11 exclusions and/or limitations for “Terrorism” have appeared in the policy or by endorsement.  Concerned about the limited availability of terrorism coverage in high-risk areas and its impact on the economy, Congress passed the Terrorism Risk Insurance Act (TRIA). The Act provides a temporary program that, in the event of major terrorist attack, allows the insurance industry and federal government to share losses according to a specific formula. TRIA was signed into law on November 26, 2002 and renewed again for two years in December 2005. Passage of TRIA enabled a market for terrorism insurance to begin to develop because the federal backstop effectively limits insurers’ losses, greatly simplifying the underwriting process. TRIA was extended for another seven years to 2014 in December 2007. The new law is known as the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) of 2007.

In return for the TRIA federal backstop, commercial insurers must make terrorism coverage available and conspicuously state the premium charge for their policyholders.  A policyholder may accept or reject  the offer of TRIA coverage. Commercial insurers must make coverage available on the same terms and conditions as they offer in their non-TRIA coverage. 

Source: Insurance Information Institute, News Release - III Offers Information, Analysis On the Insurance Implications of 9/11, Sept 2, 2011


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