Many risk managers are doing their best Alfred E. Neuman impersonation, seemingly echoing the classic catch phrase of “Mad” magazine's cartoon icon–”What, Me Worry?”–with their apparent lack of concern over terrorism exposures. Indeed, terrorism does not loom large on the radar screens of many risk managers surveyed by NU. That alarms me, especially with a major TRIA hearing coming up Tuesday before a House Financial Services subcommittee.

Despite all the hoopla about extension of the Terrorism Risk Insurance Act, due to expire at years end, when asked about the relative importance of various risks buyers are looking to cover over the next 12 months, just barely over half (52 percent) of the 132 risk managers queried by NU ranked terrorism as somewhat (33 percent) or highly (19 percent) important.

Meanwhile, one-in-four surveyed said terrorism coverage was neither important nor unimportant. Twelve percent ranked the exposure as somewhat unimportant, while 11 percent called the risk not at all important. (The survey was sponsored by Miller, an independent, specialist, wholesale insurance and reinsurance broker based in London, operating internationally as well as at Lloyd's.)

As for pricing of terrorism coverage, responses were all over the map. Forty percent of risk managers expect premiums to remain the same. However, while 21 percent predicted prices would rise between 1- and 24 percent, 12 percent expect a drop in that range, and 22 percent said they simply dont know.

You can't help but wonder whether risk managers are taking terrorism seriously enough. Will apathy on the part of commercial buyers undermine efforts to make TRIA permanent, or perhaps even jeopardize a simple extension?

I can't imagine either party allowing TRIA to lapse and being tagged with the dreaded “soft on terrorism” label as we approach a critical election year in 2008. But if buyers don't seem to care, will lawmakers make TRIA a priority in what promises to be a political free-for-all in Congress over every issue?

You tell me.

Special Reports /

Do Risk Managers Care About Terrorism?

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