Acts of terrorism on the scale of the 9/11 atrocities have led to new responses in the way government and businesses deal with liability.

One of the immediate effects of the September 11, 2001 terrorist attacks in the United States was a massive though short-term increase in insurance premiums for buildings and other facilities. In addition, in the words of Tom Donohue, president and CEO of the US Chamber of Commerce, "the private terrorism insurance market essentially evaporated." However, Donohue added: "Catastrophic terrorism remains an uninsurable risk because its frequency and location cannot be predicted, and its potential scale could be devastating."

Until then, insurance against acts of terrorism had, in effect, been included at no additional charge in most policies, simply by being 'silent' (not mentioned nor excluded). September 11th changed that.

Congress recognized the problem and passed the Terrorism Risk Insurance Act of 2002 (TRIA) creating a partnership between government and the private sector for a three-year period in order to give businesses the reassurance they needed. Congress is now debating whether to extend TRIA, which excludes nuclear, chemical, and biological attacks. If Congress fails to act on this issue prior to December 31, 2005, the ability to purchase terrorism risk insurance may be drastically reduced due to the federal government's elimination of financial support to the insurance companies that provide this coverage. According to a recent BOMA International Action Alert, you can expect to see the return of exorbitant rates, caps on coverage, and high deductibles that were experienced following the September 11th attacks.

These attacks are believed to have resulted in losses of $40 billion. In addition, almost $5 billion will be paid to The September 11th Victims' Compensation Fund.

Donohue made his comments in March 2005 to emphasize what he and others see as the urgent need to extend TRIA beyond the end of this year. His argument is that companies that are now negotiating insurance policy renewals for next year and beyond are finding that their terrorism coverage will be severely limited or dropped altogether if TRIA is not extended.

There are those who argue that TRIA is unnecessary because the insurance industry is capable of absorbing such costs and does so regularly when faced with natural disasters. Others argue for the establishment of a reinsurance pool similar to that established in Britain to finance terrorism losses, after IRA bombings in London that caused insured damages of $1 billion (1992) and $500 million (1993). Insurers have agreed to establish a pool to meet claims resulting from terrorism up to an agreed level. The British Government would meet any claims over that amount.

Meanwhile, the US Government has introduced an equally important piece of legislation that responds to another major concern - the question of liability among suppliers of products and services used in the fight against terrorism.

Enacted as part of the Homeland Security Act of 2002, the SAFETY Act is designed to facilitate the development and deployment of anti-terrorism technologies by creating systems of risk and litigation management.

The name of the legislation stands for "Support Anti-terrorism by Fostering Effective Technologies" Act. What it does is to give sweeping liability limitations and, in certain cases, complete immunity for all third-party damage claims arising out of acts of domestic or foreign-based terrorism, to those companies whose anti-terrorism products and services have been reviewed and approved by the Department of Homeland Security (DHS).

When negotiating or bidding the security for your building it may be beneficial to inquire if the security company is certified under the DHS Safety Act. According to the DHS' approved definition, a certified contract security company's services are designed to envision and defend against possible terrorist scenarios, deny terrorists access to secured facilities, and to respond to terrorist related security breaches. This could be a tremendous benefit to those businesses that use a qualified physical security service since they will also benefit from the protections afforded to the contractor. Because of this, we encourage you to discuss any positive affect this may have on your terrorism risk insurance with your underwriter.