Backing Out of TRIA Harms Us All
Insuring risk is a societal and economic necessity. The goal of insurance is to spread risk across a large enough pool of people or businesses with similar risk profiles as to make the costs and variability manageable.
No one entity can reserve for or pay for catastrophic events such as the loss of a home or business. So we all pay yearly in the form of premiums that go into a pool to protect those struck by catastrophe.
Risk is measured in two major categories 1) the probability of an event and 2) the impact if an event happens.
The nature of terrorism is that single actors or small groups can greatly impact both categories, i.e. Timothy McVeigh and a truck load of fertilizer. There are many of us and many ways other humans can harm life and property.
If the government won’t protect us from terrorism and it won’t help insure the results of terrorism, then we have an unprotected economy.
Terrorism is also something that tends to hurt people who aren’t traditionally in high risk jobs, but just happen to be in the wrong place at the wrong time.
If you think back to 9/11 in New York City, or the Oklahoma City bombing, those both took the lives of many people in otherwise low-risk professional classifications.
It is impossible to predict where in our country the next strike may occur, therefore we need to spread the risk pool to as large a group as possible; which means all of the tax base of the country, which is our government. That is what we do with flood insurance, that is why we need to do it with terrorism insurance.
If the government won’t protect us from terrorism and it won’t help insure the results of terrorism, then we have an unprotected economy. The risk of a terror event is too big for private insurers to cover and would be too expensive for business to afford the premiums.
Without TRIA and without protection from terrorism we will have a dysfunctional economy. It is the duty of the government to provide an environment where our economy can flourish. Until we have responsible government we can expect an impeded economic outcome.
The Federal Government has a responsibility to provide something like TRIA. These terroristic acts aren’t aimed at any one person, company or even a city.
Terrorists are using these heinous, violent acts to attack our nation and our government. Our government was created with the security of our nation as its primary responsibility. TRIA needs to be reinstated so that our government can live up to that responsibility.
Read all of Jerry Poole’s Risk Insider contributions.