Risk managers look mostly at two areas of terrorism insurance:property and workers' comp, says Carolyn Snow, secretary of theboard of directors for the Risk and Insurance Management SocietyInc. (RIMS), a nonprofit organization representing some 3,500members worldwide.

Risk management professionals are becoming more aware of theimpact a terrorism event could have on workers' comp, says Snow,who also is director of risk management at Humana Inc. inLouisville, Ky., and the board liaison to the RIMS External AffairsCommittee.

Capacity in workers' comp could become a significantissue—something more risk managers are becoming aware of, she says.“Initially, people thought of it as an issue for larger employers,but if you're a smaller company in an area that might need TRIAcoverage, an insurer might want to cover only larger companies. Youmight end up without terrorism coverage.”

Insurance companies would have to look at concentrations ofemployees far closer than they look at them now, she says: “If TRIAwas not available, capacity could be an issue.” The Terrorism RiskInsurance Program Reauthorization Act (TRIPRA), which succeeded theoriginal TRIA legislation, expires on Dec. 31, 2014.

Workers' comp was high on everyone's mind after the 9/11terrorist attacks, Snow says: “Immediately after 9/11, all theinsurance companies were asking questions they hadn't asked beforeabout aggregation of risk for your employees; then it kind of dieddown. Now lately I think people are starting to think about itagain.”

A real challenge for risk managers is finding ways to mitigatethe effects of a terrorist attack. “That's really a hard thing todo for risk managers,” Snow says. Nationwide, some courthouses haveput up traffic barriers, and some public buildings have limitedgarage access. But it's tough mitigation from a workers' comp pointof view.

“If you're starting from scratch, you can begin to do thosethings. Also you can do retro-fitting around existing buildings,”says Snow. But it's not something that can be put in place in everybuilding in a given city: “It's not a quick, easy or inexpensivefix.”

The risk managers that have property schedules and bankingrequirements in their agreements for TRIPRA cover are likely theones most concerned about its renewal, Snow says: “Jan. 1 renewalsare not that far off. You don't know if the program is going to bethere next year, and that's the biggest issue now for riskmanagers: not knowing when the program is going to beavailable.”

RIMS members are encouraged by the numbers of companies andorganizations that have come out in support of TRIPRA, from largebrokers like Marsh and Aon to the National Association of InsuranceCommissioners. The Senate Banking Committee is even meeting onit.

“One of our concerns at RIMS is that a lot of the senators andpeople in the House of Representatives who were around when TRIAwas first implemented—and even when it was renewed and extended—aregone now. You don't have the same people in Congress that have theinstitutional knowledge around the creation of TRIA. That's a bigconcern as we figure out how to educate the member of Congress onTRIA.”

It's also part of RIMS' ongoing educational efforts for riskmanagers, she says. RIMS recently released a white paper, TerrorismRisk Insurance Act: The Commercial Consumer's Perspective, aproduct of the external affairs committee to promote education onTRIA/TRIPRA and Terrorism Insurance. RIMS members also try tospread the word by speaking at conferences and testifying beforeCongressional committees.

“Those are the basic things we're doing: educating our membersand Congress, and getting our faces in front of them when we can.We're also working with other groups that are in support of TRIPRA.We're trying to keep it out there in front of people's faces so wecan get the extension.”

Insurer groups, too, are doing their part to push for a TRIAextension. Leigh Ann Pusey, president and CEO of theAmerican Insurance Association, says, “Terrorism risk presentsunique challenges for businesses across the U.S. The unpredictablenature of terrorism – an intentional act – makes it a risk thatinsurers can only cover through a public-private partnership likeTRIA. TRIA has stabilized the market, protected taxpayers,and made terrorism coverage widely available while providingpredictability for an orderly economic recovery following anevent. AIA is hard at work laying the groundwork forreauthorization as the issue continues to gain traction on CapitolHill.”     

The big takeaway that a lot of people had after the BostonMarathon attack was the vulnerability of the venue. Now, it seems,a terrorist attack can happen at any event.

And while the Boston event has yet to be declared a true act ofterrorism, Snow says it might be a moot point: In most people'sminds, she says, the Boston bombing is already a terror eventbecause of the scale of the destruction, the media attention andthose killed.

Crafting a permanent solution to the recurring TRIA extensionproblem will be difficult because as terrorism risk changes, apermanent solution might not always be the best solution. Thatsaid, Snow does note that a long-term solution would be ideal sothat risk managers were not faced with the recurring prospect ofTRIA's expiration.

“When people think about terrorism, they think of New York andWashington, D.C. and those areas of the country. Unfortunately,that really tragic event in Boston made people aware of it again.That says to people that it could happen anywhere.”