NU Online News Service, May 2, 2:14 p.m.EDT

Demand for insurance to cover terrorism risk, and the appetiteof commercial insurers to write it, could grow following thekilling of Osama bin Laden by United States forces.

Robert Hartwig, president of the Insurance InformationInstitute, says the death of the Al Qaeda leader and mastermindbehind the largest insured loss in insurance history untilHurricane Katrina may "increase the realization that the threat waselevated" even before Sunday's news that operatives cornered andkilled bin Laden in Pakistan.

"While everyone hopes this will reduce the threat," Hartwigsays, "we are now being told that there is actually an enhancedpotential."

The U.S. State Department warned today about the added chance ofanti-American violence following bin Laden's death.

Simultaneously, the insuranceindustry—which once excluded terrorism risk from commercialpolicies after 9/11—could eventually find a new confidence to writein the most at-risk areas now that bin Laden is gone.

"It depends on the perception of this event, whether there is anincrease in the willingness to write from property and casualtyinsurers and reinsurers," says Hartwig, who co-authored a report with Claire Wilkinson, vicepresident of Global Issues at the I.I.I., released last month.

While one can speculate on the impact bin Laden's death willhave on the commercial-insurance industry, "no interpretation canconclude the Terrorism Risk Insurance Act [TRIA] is obsolete. Thatwould be a mistake," Hartwig continues.

Commercial coverage of terrorism risk after 9/11 only returnedwhen Congress enacted TRIA late in 2002.

"The industry is generally satisfied, it is a successfulprogram, and it costs taxpayers nothing," Hartwig says.

Nevertheless, TRIA, which established a partnership that allowsthe federal government and the insurance industry to share lossesin the event of a major terrorist attack, has been heavilyscrutinized. According to the I.I.I. report, President Obama'sbudget plans included a scaling-back of support for the program,now called TRIPRA after the Terrorism Risk Insurance ProgramReauthorization Act of 2007 extended the program for the secondtime.

The industry will have time to assess the affect bin Laden'sdeath has on the frequency of global terrorist attacks. TRIPRA doesnot expire until 2014.