This weekend marks the tenth anniversary of the September 11 attacks which brought down New York City’s World Trade Center. Since the attack, the political landscape has changed dramatically, a shift that has been mimicked throughout society as terrorism more people became aware of terrorism. Many things changed in the wake of 9/11, and while many of these changes resided within the boundaries of the nation, the entirety of the world’s insurance industry underwent a drastic shift.
The Insurance Information Institute (I.I.I) has been studying the changes in the worldwide industry since the attacks. To date, the attacks on September 11 account for the second largest payout in the history of insurance, rivaled only by 2005’s Hurricane Katrina. I.I.I president Dr. Robert Hartwig notes in the report that after the attack, the nation’s insurance companies donned a role similar to that of emergency first responders and sought to mitigate the economic impact of the catastrophe.
Property casualty insurers paid out more than $40 billion along with reinsurers. Terrorism risk insurance was born in the wake of the attacks, a product that had never before existed in the U.S. Today, terrorism insurance is a mandatory coverage for some businesses in major cities.
The attacks also spawned a partnership between the nation’s insurance industry and the federal government, enacted by the Terrorism Risk Insurance Act. The Act took effect in 2002 and established a public/private risk-sharing partnership between the two entities. The partnership ensures that if the industry suffers losses as the result of terrorist attacks, the government is responsible to share the financial burden.