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Risk Associated with Domestic Acts of Terrorism Shifting


According to the report by RIMS, a reputable risk management society, it suggested the risks of domestic terrorism which poses a threat to property, causes injury to the human body and spread over several incidents have shifted. In the report titled “Terrorism Insurance: Understanding the Boundaries of Coverage for a Risk Without Borders,” it postulated that the effects of domestic acts of terrorism have moved towards a small number of prestigious events and causing bodily harm. In its submission, it cited examples of terrorist raids in Orlando and Dallas last year and in recent times, the Las Vegas concert killing where several individuals lost their lives.
 
The RIMS report went further to analyze the typical risks of domestic terrorism which often comes to our minds such as destruction of properties and bodily harm, but those risks have expanded and include other cases. Such cases are pollution loss and liability, business interruption loss, privacy and network security liability, professional liability, fiduciary liability for corporate directors and officers. Even though a company does not fully accept the risk of terrorism to serve as an insurance panacea, some terrorism coverage may be needed by contract provided in the agreement with financial institutions that specialized in lending.
 
Most contracts often specify the class and amount of coverage needed by counterparty, while other contracts use the term all risk or other insurance to secure conventional insurance coverage.
 
Without mincing words, terrorism risk insurance is becoming an integral part of the domestic corporate insurance plans. A press release from RIMS observed that the anxiety over the risk that terrorism posed is real and the terrorism risk insurance has not been fully comprehended. Moreover, the corporate risk administrators can take preemptive actions to curtail the effects of terrorism danger.
 
The narration from RIMS also observed that traditional insurance policies which cover general commercial liability and property plans might offer coverage for terrorism dangers if not exempted. Most of the individuals also have insurance policies with express, endorsed exclusions for recognized events of terrorism which increase the need for federal grants in the Terrorism Risk Insurance Program Reauthorization Act of 2015. Foreign or domestic acts of terrorism termed as certified must have fulfilled some conditions which include a summative loss valued at $5million. 
 
Since the Congress passed the Terrorism Risk Insurance Act of 2002 which compel insurers to provide P&C insurance coverage for losses incurred through the acts of terrorism, the United States Government is yet to certify an act of terrorism. A federal pact was put in place to cater to the needs of those affected by the verified terrorism actions. In 2015, this plan came into effect through TRIPRA. This collaboration between TRIA and TRIPRA has provided the companies the opportunity to acquire terrorism coverage with the traditional P&C coverage.
 
Since TRIA was ratified, the United States Government has never verified an act of terrorism. This means that if an existing insurance policy does not make provision for certified terrorist actions, it can provide first and third party insurance coverage for bodily harm and property damage which is related to terrorism. The report also confirmed that some insurance policies do not include other acts of terrorism in their agreements. 
 
Though the term certified acts of terrorism are explained in a separate terrorism plan, its meaning should align with terrorism prohibitions in liability, property and other conventional insurance plans to prevent a massive space in coverage. In its conclusion, the report observed that the need for terrorism coverage is a role of growing ability of the market and augmented risk. The RIMS also warned that policyholders should be careful in the selection of the appropriate terms that suit their needs and help them in the case of a terrorist attack as there are several insurance policies available in the market today.
 
It is the responsibility of the risk management and legal team to take considerable time to analyze the detailed stipulations of the standalone insurance policy if a corporate policyholder chooses the option of a standalone insurance policy. The terms that should be examined are cases that have to deal with business disruption, destruction of properties, period of liability, valuation of claims for property damage and other factors.