Evaluating the Effectiveness of Terrorism Risk Financing Solutions

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引用次数: 9

Abstract

The 9/11 attacks in the United States, as well as other attacks in different parts of the world, raise important questions related to the economic impact of terrorism. What are the most effective ways for a country to recover from these economic losses? Who should pay for the costs of future large-scale attacks? To address these two questions, we propose five principles to evaluate alternative programs. We first discuss how a federal insurance program with mandatory coverage and a laissez faire free-market approach for providing private insurance will fare relative to these principles. We conclude that neither solution is likely to be feasible here in the United States given the millions of firms at risk and the current structure of insurance regulation. We then evaluate how well the U.S. Terrorism Risk Insurance Act (TRIA), a public-private program to cover commercial enterprises against foreign terrorism on U.S. soil, meets the five principles. In particular, we show that TRIA has had a positive effect on availability of terrorism coverage and also has significantly contributed to reducing insurance premiums. TRIA is scheduled to terminate at the end of the year, but pending legislation would extend the program for fifteen years after December 31 (HR. 2761). In this paper, we show that such a long-term extension might have important impacts on the market. This could increase the take-up rate, as prices might be even lower than they are today. We show also, however, that if TRIA were extended for a long period of time in its current form, some insurers could "game" the program by collecting ex ante a large amount of premiums for terrorism insurance, while being financially responsible for only a small portion of the claims ex post. The general taxpayer and the general commercial policyholder (whether or not covered against terrorism) would absorb the residual insured losses. This raises major equity issues inherent in the design of the program.
评估恐怖主义风险融资解决方案的有效性
在美国发生的9/11袭击,以及在世界不同地区发生的其他袭击,提出了与恐怖主义的经济影响有关的重要问题。一个国家从这些经济损失中恢复的最有效方法是什么?谁来支付未来大规模袭击的费用?为了解决这两个问题,我们提出了评估备选方案的五个原则。我们首先讨论一个具有强制性保险的联邦保险计划和一个提供私人保险的自由市场方法将如何相对于这些原则进行。我们得出的结论是,鉴于数百万家公司面临风险,以及目前的保险监管结构,这两种解决方案在美国都不太可能可行。然后,我们评估《美国恐怖主义风险保险法》(TRIA)在多大程度上符合这五项原则。《恐怖主义风险保险法》是一个公私合营的项目,旨在保护商业企业免受美国领土上的外国恐怖主义的侵害。特别是,我们表明TRIA对恐怖主义保险的可获得性有积极影响,并且对降低保险费也有显着贡献。TRIA计划在今年年底终止,但待决的立法将在12月31日之后将该计划延长15年。2761)。在本文中,我们证明了这种长期延长可能对市场产生重要影响。这可能会提高采用率,因为价格可能比现在更低。然而,我们也表明,如果TRIA以目前的形式延长很长一段时间,一些保险公司可以通过事先收取大量的恐怖主义保险保费来“玩弄”该计划,而在事后只承担一小部分索赔的财务责任。一般纳税人和一般商业保单持有人(无论是否投保恐怖主义)将承担剩余的保险损失。这就提出了该计划设计中固有的重大公平问题。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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