Trends in Transnational Terrorism and Implications for U.S. National Security and U.S. Terrorism Risk Insurance Act

The unprecedented losses brought about by the attacks of 11 September 2001 have cast the issue of terrorism risk insurance into sharp relief. In particular, it has raised questions as to whether attacks on this scale are an insurable risk and the extent to which the private insurance industry is able and/or willing to price such risks independent of a Federal safety net. Although the Bush administration has committed to renew the Terrorism Risk Insurance Act (TRIA) to offset the human and materiel costs that might result from future cataclysmic terrorist strikes taking place on U.S. soil, it is not apparent that this legislative framework is relevant to the type of extremist contingencies that the United States is likely to face over the short-to-medium term. Any long-term solution to providing insurance in America will necessarily need to go beyond TRIA's existing framework by dropping the “foreign interest” designation for certified attacks; including some sort of supplemental program that includes mandatory coverage for chemical, biological, radiological, and nuclear (CBRN) assaults; and investigating ways to increase the take-up rates of terrorism insurance by lowering its cost to the customer. An oversight board mandated to evaluate the Act's performance and relevance to evolving terrorist trends would also be useful.