The shoe has not yet dropped, but according to Don Phillips, a columnist for Trains Magazine, in the April 2007 issue, the government is holding the shoe precariously above at least one industry (and who knows how many others) and it may fall at any moment. Government, in the form of the Transportation Security Administration (TSA), a part of the Homeland Security Department, seems anxious to involve itself in the protection of all freight and passengers. The current shoe is more like a hobnail boot. Other dropping shoes include airlines or container ships and their ports, but the TSA hasn't gotten much beyond making airline passengers remove their shoes yet, and worrying the airlines over their unexamined cargo.
So, what's wrong with a little security? Well, perhaps nothing, if you never receive anything that may have been shipped by rail (such as your new automobile), stuff shipped by UPS, your latest head of lettuce, or if you never ride a train. I suspect many Claims readers, at least those outside of the Northeast, Chicago, or a few other isolated locations, may never have ridden a train, with the possible exception of the choo-choo at Disney World. Oh! That may be included.
Writes Phillips, the TSA "has proposed new rules for railroad security. To the great relief of Amtrak and other passenger operators, TSA did not [yet] propose searches of passengers as they board. But," continues Phillips, "freight railroads are not all that happy with some of the hazardous freight requirements and are certain to lobby for changes in the final rule. In a move that is almost certain to produce laughs, the proposal would also extend to private railcars, as well as tourist, scenic, historic, and excursion operations, plus," says Phillips, "cable cars, trolleys, and inclined planes."
Security on a streetcar? He's joking! No, he's not, and neither is the TSA. The TSA wants regulations permitting them to enter railroad or transit property at any time of day or night without advance notice to inspect railcars and equipment. TSA agents, mostly ex-lawmen with about as much knowledge of railroad operations as the typical hotel maid, would be allowed to stop the railroad while they inspect. They would also have access to not only all rail facilities, but also to all of the railroads' records, of which they could demand copies. Whatever happened to that Constitutional guarantee that we could "be secure in [our] persons, houses, papers, and effects, against unreasonable searches and seizures" without a warrant {Article IV}?
Good Security and Bad Security
Common sense dictates that with the international terrorist threats security is a necessary endeavor. But like any aspect of risk management, it has to have an element of common sense. National security involves the same steps that a corporation would employ in managing its risks. First, identify the exposure, then identify the hazards that might create a peril, and evaluate the risk/cost factors. Some risk is necessary. While it might be safer for the driver to challenge the local interstate in a Sherman tank, that safety factor only creates different hazards and exposures. The mini-compact car is no match for a big tractor-trailer, or even a Hummer. Some risk of loss must be accepted.
For the railroads and their customers (ultimately you and me) such new regulations would be far worse than lining up for screening at the airport. Currently the planes take off (if they leave at all) pretty much on schedule, whether the passengers are aboard or stranded by some crabby TSA agent back at the security checkpoint who thinks the name "Smith" sounds kind of suspicious. Who knows how names get on the TSA's "no fly" list? Probably not even the TSA.
For airline passengers, it is no longer just shoes and carry-ons that will be X-rayed. William Saletan, in Slate.com reports that the TSA has been installing "back-scatter" X-ray equipment at airports that produce very striking nude-like images of all the contours of a human body. No more hiding the verboten nail polish or hair tonic in the jockey shorts or bras in order to spruce up before reaching the destination. "We lost our innocence when the planes hit the twin towers. Now we're losing our modesty," he says. Now the TSA is even confiscating those big bottles of rum the tourists are buying at duty-free shops when returning from the Caribbean. I guess the TSA must be planning one hell of a party at Miami International one of these days.
Suppose a train loaded with tank cars of hazardous chemicals is ready to depart some rail yard when a TSA guy approaches the conductor (who rides the locomotive now–there are no more cabooses) and says, "I want to see your manifest." Okay, so he takes half an hour to review it. Then the train departs, half an hour late. That puts pressure on the dispatcher to get the train to the next crew-change point within the allotted twelve hours. Because of the delay, the crew "dies" (having to stop the train where it is until a replacement crew arrives) on the outskirts of Megatown. It's on a siding. There's no TSA guy there, but some real terrorist has been awaiting just such an opportunity. Headlines read, "Rail Disaster Kills Thousands in Hazardous Blast Fumes, Terrorism Suspected."
Each month a publication called Security Director News (SDN) arrives in my post office box. I never ordered it, but it comes and I read it. Security is big business. SDN has not yet reported on the TSA's plans for the railroads, but there have been lots of articles on other aspects of the government's concern over security at the Port of Los Angeles and Long Beach. Despite the name, it is all one big interconnected harbor, and nearly all of the goods shipped from Asia in containers arrive there. I've driven through both sides of the port. Access is easy. There are literally thousands of containers being loaded off of ships and onto trucks and railcars for shipment north and east. It would take an army bigger than the one we have in Iraq to open and inspect each of those containers. There are gizmos that are supposed to be able to X-ray the contents, or sniff out explosives, but if those work as well as some other security devices the TSA has used, we're all in trouble. The most reliable tool they have is a dog.
The February, 2007, issue of SDN reports that in January of 2007, the U.S. House of Representatives "passed legislation requiring that all shipboard cargo must be screened before it enters the United States, and set a 2011 deadline for the initiative." That's about 12 million containers from about 300 foreign ports. The bill also calls for more baggage screening equipment for airports and inspection of all cargo shipped on aircraft by 2010. UPS is the eleventh largest "airline" in the world, and all of it is cargo.
If the Railroads, Why Not Insurance?
If the government can nose its way into private commerce to determine who is shipping what where–for whatever that has to do with security, as no terrorist is going to fill out papers showing that he's shipping bombs–it can also start sticking its nose into the insurance industry as well. Who is insuring what, and why? Of course, some of that might be welcome. Thirteen states don't even have a fraud bureau (except a few, for workers' comp fraud), and only 17 require insurers to have an anti-fraud program. But what the government might want to look for in an insurer's underwriting or claim files might be something far different than plain old insurance fraud. Who can guess what that "something" might be? Maybe TSA will come up with a "don't insure" list to match their "no fly" list in an attempt to keep terrorists off the highway. Do we want the federal government to have control over our claim and underwriting files?
Would those files reveal, for example, which insureds might use their automobile as a suicide bomb, or load it with poison chemicals and drive it into the local water reservoir? What we learned about Timothy McVeigh and Terry Nichols, the guys who bombed the Oklahoma City Federal Building, after the event might have been learned before it if we'd had better information. Remember, somebody somewhere rented those guys the truck they used and sold them the fertilizer.
A few industries have beaten the government to the punch by setting up their own security rules. For example, SDN reports that the American Society of Civil Engineers and the American Water Works Association have jointly developed voluntary infrastructure security guidelines. Considering that the nation's drinking water has always been a bigger terrorist target than airline passengers, where was government on that task?
Private Security Professionals
It probably will not be long before one has to have a D.S. degree (Doctor of Security) to work as a security guard. Security is now a major customer of all forms of high tech. What is available in the private sector comes close to matching what is available through the various government security agencies. Everyone's privacy is supposed to be protected from government intrusion, or so the new Congress and the media pundents seem to suggest. But who is to protect us from private security?
Read Thomas L. Friedman's The World Is Flat and you will see what our flat old world is coming to in this age of advanced information. Information on everything is now at the fingertips of every high school kid with an iPod or cell phone or whatever those gadgets are called. As Friedman suggests, better not misbehave, because it will all be stored in cyberspace and available to everyone on Google. (Good heavens, even one of the less-kind letters to the Iconoclast from a few years back is still on Google!)
Friedman writes, "Said Russian-born Google co-founder Sergey Brin, 'If someone has broadband, dial-up, or access to an Internet caf?, whether a kid in Cambodia, the university professor, or me who runs this search engine, all have the same basic access to overall research information that anyone has. It is a total equalizer." That, of course, includes al-Qaeda as well as any home-grown terrorists. They can find out exactly what they need to know to blow us all away. The TSA's own computers are probably being hacked by somebody as this is being written, so what the TSA learns about what is being shipped where, terrorists can also learn. (And who screens the TSA guys? We recently learned that they'd been hiring all sorts of rascals.)
Friedman comments, "Should there be another attack on the United States of the magnitude of 9/11, or worse, walls would go up everywhere and the flattening of the world would be set back for a long, long time. That, of course, is precisely what [terrorists] want." He continues, "When terrorists take instruments from our daily lives – the car, the airplane, the tennis shoe, the cell phone -and turn them into weapons of indiscriminate violence, they reduce trust. We trust when we park our car downtown that the car next to it is not going to blow up…."
Trust is a key element of faith, and in a good-faith industry such as insurance we must have some element of trust between insurers and policyholders. Were government, in the name of security, to bring its hobnail shoe down on the confidentiality of an insurer's records, including the underwriting and claim records, that trust would be at risk. It may fall to all of us in the industry, agents and adjusters alike, to impose our own sense of security over what we see and learn. Again, as Friedman suggests, information is the key.
Only when everyone becomes security-conscience, totally aware of what we and others around us and with whom we deal are doing, can we keep government from dropping shoes on us. Once a shoe drops, it can be difficult to get it lifted off. Like the corporate risk manager, we have to weigh all the factors in a risk/benefit ratio, applied morally and ethically. Remember the camel's nose? Once it's in the tent, it won't be long until the entire camel is inside it as well. Today the tent is the railroads and airlines and the shipping industry. Who knows what tomorrow's tent will be?
Ken Brownlee, CPCU, is a former adjuster and risk manager, based in Atlanta, Ga. He now authors and edits claim-adjusting textbooks.
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