WASHINGTON–Despite claims to the contrary, federal reinsurance of terrorism risk is not working because the government program has crowded out private coverage at the highest tiers, according to a new academic study.
The paper, presented at a recent symposium on "Private Markets and Public Insurance Programs" held by the American Enterprise Institute, was written by Dwight Jaffee, a finance professor at University of California Berkeley Haas School of Business, and Thomas Russell, associate professor of economics at Santa Clara University.
Their paper also said that insurance against nuclear, biological, chemical and radiation attacks–"potentially the most worrying form of terrorism both in terms of size and its strategic value to terrorists"–remains largely unobtainable.
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