Terrorism Insurance: how cities across the country prepare for the worst
Toledo, Ohio (WNWO) Terrorism is something on the forefront of many people's minds lately with attacks happening seemingly closer to home.
Across the country, local governments are tapping into a federal fund for terrorism insurance to help pay for the aftermath if something were to happen.
Following 9/11, the federal government stepped in to help insurance companies when it comes to covering catastrophic claims.
The Terrorism Risk Insurance Act was signed into law in 2002 by President George W. Bush.
TRIA has specific guidelines. It's executed if the Treasury Department certifies the act as terrorism and the losses are greater than $100 million.
"Right now currently it is a shared type program," explained Jessica Biggs, client service director at Hylant. "It's a shared between the federal government. They take 85% of the loss and the insurance companies take on at 15% of the loss. It caps at $100 billion. So anything that would exceed $100 billion is not insurable."
Toledo Risk Manager Terry Green says the city has been participating in this program for at least the last decade.
"This is a premium that allows us to participate and this comes right out of the Treasury Department," said Green. "So that provides us coverage. Like you mentioned, there's $100 billion limit on that. That's a whole different stratosphere than what we're talking about here."
Green says the city's property comes closer to the one billion dollar mark.
"It's very specific buildings," said Green. "It covers all of the city's property, that is the physical property of the buildings, as well as all of our machinery and vehicles. Mobile equipment we call it."
That includes the safety building, the municipal courthouse, the city's health center, and the water treatment facility.
"It could be an act that takes place at multiple locations which is hard to imagine," said Biggs. "It's difficult to even understand. It would be a loss of life human life, destruction of infrastructure, destruction of buildings, so any type of loss of life and property...something of significance, something of catastrophic magnitude."
Of the city's yearly $341,000 insurance premium, a fraction of that, $8,492, goes toward terrorism coverage.
"Look I'm a tax payer," said Green. "I certainly I hate to beat a dead horse with this no-brainer, but for that amount, we have $1 billion worth of property. I think it's only prudent that we would participate in that fund."
Green says the city leaders looked outside of Toledo when it first came to opting in.
"We're going to follow our own lead, but it certainly gives us good guidance. I think pretty much every city was taking advantage of this that we had contacted."
Biggs affirms that finding.
"At this point overall as an organization, overall the majority of our clients are purchasing some form of terrorism coverage."
Green says he's not aware of any credible threat to Toledo.
The current Terrorism Risk Insurance Act expires in 2020. It'll go back before Congress to be renewed.