"Who Bears the Risks of Terror" leads the Sunday Businss section of the Times today. Edmund L. Andrews' piece provides a concise and readable "fly-over" of the principal issues in the debate over the future of TRIA. He notes a developing red state / blue state divide and the positions of Rep. Delay and Sen. Frist that the role of federal help "had run its course."
Andrews compares impact of 9/11 on the insurance industry ($31 billion) with that of 1992 Hurricane Andrew ($20 billion). He also cites insurance industry funded reports by R. Glenn Hubbard (Columbia Univ.) and Kent Smetters (Wharton School). He also points to the debate over the impact on private markets of the presently "free" federal coverage, and also notes the possible negative impact on private security "hardening" that such subsidized protection may have.
An excellent article for the busy novice to this complex economic controversy.
Who Bears the Risks of Terror? - New York Times (Sunday Business page one, July 10, 2005).
For another perspective on terror risk distribution, see also this view:
"The administration seems comfortable with transferring risk away from taxpayers and into the private sector. Private insurers, in turn, will ask their actuaries to calculate the potential exposures (no easy task) and will then try to pass the added costs along to their customers. But which customers will be willing to pay? For insureds living in high risk areas, business owners are very likely to opt for terrorism coverage. But what about the machine shop in Leominster MA? Or the Midas Muffler franchise in LaGrange GA? The fact is, the vast majority of businesses are likely to decline coverage, because we all seem to think that most of the risk resides in the big coastal cities. That leaves the burden for coverage on a relatively small number of businesss: their costs will go through the roof, while the costs for everyone else will stay pretty much the same."
Found at: Workers Comp Insider - TRIA: Terror and Risk Transfer (July 7, 2005)
Posted by dougsimpson at July 10, 2005 07:34 AM