Catastrophe risk, insurance and terrorism

This article empirically investigates how the terrorist activity of September 11, 2001, was addressed by the insurance industry and government in the United States. It shows that the insurance system worked reasonably well in compensating losses suffered, albeit with various tribulations. It also de...

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Bibliographic Details
Published in:Economy and society 2004-05, Vol.33 (2), p.135-173
Main Authors: Ericson, Richard, Doyle, Aaron
Format: Article
Language:English
Subjects:
catastrophe
Catastrophes
Certainty
Disasters
Economics
General studies. Ideologies
Governance
Insurance
Insurance industry
Market structure
Political sociology
Risk
Risk management
Risk Society
Sociology
Structural adjustment
Terrorism
U.S.A
Uncertainty
United States of America
Windfall profits
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Summary:This article empirically investigates how the terrorist activity of September 11, 2001, was addressed by the insurance industry and government in the United States. It shows that the insurance system worked reasonably well in compensating losses suffered, albeit with various tribulations. It also demonstrates that the insurance industry, along with government as the ultimate risk manager, imaginatively reconfigured markets to continue terrorism insurance coverage in many contexts. The findings challenge many of Ulrich Beck's contentions about catastrophe risks and insurability. At the same time, they indicate the fragility of the insurance system. Insurers' perceptions and decisions about uncertainty - with potential for windfall profits as well as catastrophic losses - create crises in insurance availability and promote new forms of inequality and exclusion. Hence, while the insurance industry is a central bulwark against uncertainty, insurers can also play a key role in fostering it.
ISSN:0308-5147
1469-5766
DOI:10.1080/03085140410001677102