The Long ViewA house divided

Published 21 November 2005

It has been over four years since 9/11, but many of the problems brought to the fore by that event are yet to be fully addressed. One of the hardest hit industries after 9/11 was the insurance industry, and as a result, government has stepped in to help the industry by giving subsidies to insurance providers to cover such catastrophes. The Risk Insurance Act (TRIA) of 2002 was set up to assist insurers and lessen the burden they would incur as a result of a terrorist attack. Indeed, the fear was that no company would offer terror insurance at all unless the government found a way to become the insurer of last resort. TRIA is set to expire next month. The question is whether to extend the act, for how long, and with what terms. Currently there is a bill in the works in Congress to extend the program, but a major question is out of whose pocket the money will be taken. The House and the Senate are divided and the White House has already chosen sides. There is a deeper question here, though: Should the government be in the insurance business at all? Phrased differently, would the free market, left to itself, offer terror insurance without some kind of a government backstop? Read this Wall Street Journal report (sub. req.) for a more in-depth view of the situation.