The impact on workers' compensation insurance markets of allowing the Terrorism Risk Insurance Act to expire

Congress enacted the Terrorism Risk Insurance Act (TRIA) in 2002, in response to terrorism insurance becoming unavailable or, when offered, extremely costly in the wake of the 9/11 attacks. The law provides a government reinsurance backstop in the case of a terrorist attack by providing mechanisms f...

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Main Authors: Dworsky, Michael, Dixon, Lloyd S. (Author)
Corporate Authors: Rand Corporation, RAND Center for Catastrophic Risk Management and Compensation
Format: eBook
Language:English
Published: [Santa Monica, California] Rand Corporation [2014]©2014, 2014
Series:Policy brief / Rand Corporation
Subjects:
Online Access:
Collection: JSTOR Open Access Books - Collection details see MPG.ReNa
Summary:Congress enacted the Terrorism Risk Insurance Act (TRIA) in 2002, in response to terrorism insurance becoming unavailable or, when offered, extremely costly in the wake of the 9/11 attacks. The law provides a government reinsurance backstop in the case of a terrorist attack by providing mechanisms for avoiding an immediate drawdown of capital for insured losses or possibly covering the most extreme losses. Extended first in 2005 and again in 2007, TRIA is set to expire at the end of 2014, and Congress is again reconsidering the appropriate government role in terrorism insurance markets. This policy brief examines how markets for workers' compensation (WC) insurance would be affected if TRIA were to expire. They explain that TRIA expiration would affect WC insurance markets differently from other insurance markets because WC statutes rigidly define the terms of coverage, such that in a post-TRIA world insurance companies would limit their terrorism risk exposure by declining coverage to employers facing high terrorism risk. Because WC coverage is mandatory for nearly all U.S. employers, employers that cannot purchase coverage would be forced to obtain coverage in markets of last resort. Migration of terrorism risk to these markets of last resort would increase the likelihood that WC losses from a catastrophic terror attack would largely be financed by businesses and taxpayers throughout the state in which the attack occurs, adding to the challenge of rebuilding in that state. TRIA, in contrast, spreads such risk across the country
Item Description:"RR-643-CCRMC"--Page 4 of cover. - "RAND Center for Catastrophic Risk Management and Compensation"--Page 4 of cover
Physical Description:20 pages
ISBN:0833086642
9780833086648