On today's solemn anniversary of the 9/11 terrorist attacks, theInsurance Institute for Business & Home Safety (IBHS) joinswith citizens across the country in remembering those whose liveswere lost, and the sacrifices that were made. Today also reminds usof the importance of being prepared and vigilant in the face ofpossible future terrorist acts.

“As Americans, we pay our deepest respect today to the bravefirst responders on 9/11, to the families and communitiesdevastated by the loss of loved ones that day, and to those whohave worked diligently to keep our country safe from terrorismsince then,” says Julie Rochman, president and CEO of IBHS.

“One of the most important mechanisms put in place as the resultof the 9/11 attack to maintain the nation's economic security wasthe Terrorism Risk Insurance Act of 2002 (TRIA). This law, whichhas been reauthorized twice, is still a critical tool forbusinesses and communities against a highly unpredictable risk, andit should be extended before it expires in 2014,” Rochmanasserts.

IBHS recently submitted comments to the President's WorkingGroup on Financial Markets regarding TRIA and the long-termavailability and affordability of insurance for terrorism risk.“TRIA was put in place because of several challenges for privateinsurers related to underwriting coverage for terrorist acts. Thevery nature of terrorism—particularly attacks involving nuclear,chemical, biological, or radiological weapons—is that it isunpredictable, and virtually impossible to mitigate against, unlikemany natural hazards. The federal backstop that TRIA provides inthe event of a truly catastrophic terrorism act is essential to thestability of our nation's business sector.

“Without TRIA, commercial policyholders, particularly in largeurban areas, near landmark properties or involved in criticalinfrastructure, would have difficulty securing insurance coverage.This, in turn, would cause real estate and financial conditions todeteriorate in those areas. While mitigation techniques tostrengthen buildings and business continuity plans are vital toreducing risk, they are wholly inadequate with respect to replacingthe financial and economic security provided by TRIA,” Rochmanexplains.

The building science community has identified several mitigationtechniques to strengthen buildings against blasts and some othertypes of attack, but they cannot sufficiently protect againstterrorist acts for several reasons:

• Security against terrorism tends to be very site- orstructure-specific, making it more difficult to identify andimplement solutions.
• Many experts' landscape and layout recommendations toprotect against terrorism are not feasible in urbansettings.
• Blast protection devices may not be effective if thepressures exerted on the building are too great.
• Mitigation requires a systems-based approach, not just thestrengthening of one component, making it more expensive andharder to completely implement.

“Business and community preparedness, just as with naturaldisasters, makes residents and businesses more resilient and ableto recover as quickly as possible from major incidents. However,planning alone cannot fully negate the unique risk created byterrorism to the point that it can be fully managed by privateinsurers.

“These limitations are not a reason to abandon mitigation orinitiatives to create a preparedness culture, but ratherrecognition that a comprehensive terrorism risk management strategyshould include the federal financial risk management componentprovided by extension of TRIA,” Rochman concludes.