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gram losses. Both medium and large airport operators also airport operators tend to purchase war and terrorism cover-
reported experience with OCIPs; however, only large airport age for property. Small airport operators tend to buy war and
operators reported the purchase of contractors' pollution lia- terrorism coverage for liability lines.
bility insurance.
Of the 19 total airport operator respondents, 14 indicated
purchase of some form of war and terrorism coverage. Ten
WAR RISK AND TERRORISM INSURANCE of 19 purchase the coverage for general liability and 11 of
19 for property. Five of 19 respondents do not purchase any
Terrorism insurance in the United States is provided through form of terrorism coverage (see Figure 4). A 2009 survey
two principal mechanisms. One is government-sponsored conducted by Airports Council InternationalNorth Amer-
under the Terrorism Risk and Insurance Act (TRIA) and its ica found that 10 of 35 respondents had no form of terrorism
successors and provides a limited pool of coverage ($100 bil- liability coverage and 13 of 35 did not purchase the coverage
lion) and requires certain conditions such as a declaration of for property insurance.
an act of terrorism, losses of more than $100 million total
from the terrorist act, and other requirements. Under TRIA,
insurers are "reinsured" by the federal government.
"War risk" is excluded under most commercial policies
since the terrorist acts of 2001. However, in recent years, it
has been possible in the aviation industry to "buy back" the
coverage. Doing so provides a less restrictive form of cover-
age without the conditions required by TRIA.
At the 2009 Airports Council International (ACI) Risk
Management Conference, presenter Clayton Hill, Area Vice
President for Broker Arthur J. Gallagher, made an effective
case for the purchase of war and terrorism coverage, point-
ing out, "Serious consideration should be given to obtaining FIGURE 4 Lines of coverage for which airport operators
War and Related Perils coverage. This is often under sold purchase war and terrorism insurance. Numerical axis shows
and misunderstood as only coverage for acts of war and ter- number of airport operators responding.
rorism" (ACI-NA Insurance and Risk Management Confer-
ence 2009). Five of six large airport operator respondents purchase
war and terrorism coverage for airport property. Four of the
However, a liability policy as issued without the war six large operators purchase war and terrorism coverage for
risk endorsement excludes coverage for strikes, riots, civil general liability lines, and two purchase war and terrorism
commotions or labor disputes, and/or any malicious act of coverage on builders' risk policies. Only one large airport
sabotage. Labor disturbances do not apply only to airport operator respondent did not purchase any type of war and
employees and may extend to assaults by an individual or terrorism insurance.
a group in connection with any of the above acts. Without
war and terrorism coverage, these acts may go uncovered. Three of six medium airport operator respondents pur-
Furthermore, without the war risk endorsement, physical chase war and terrorism coverage for property. Only two of
injuries to others resulting from one person's malicious act the six medium airport operators procure war and terrorism
may also remain uncovered (ACI-NA Insurance and Risk coverage for general liability and builders' risk policies. One
Management Conference 2009). medium airport operator respondent also did not purchase
any type of war and terrorism coverage.
War risk and terrorism concerns correlate closely to air-
port size, although only four of 19 airport operators (all large Two of the seven small airport operators reported that
airport systems) identified the exposure as among their three they do not purchase insurance for acts of war and terror-
greatest loss exposure concerns. The larger the airport, the ism. Of those that do, three of five operators purchase war
stronger the concern that the facility and its passengers may and terrorism coverage for liability, and two operators obtain
be targeted. A majority of large airport operator respondents war and terrorism coverage for property. Although the sur-
and half of medium respondents do purchase war and terror- vey did not explore why a smaller operator would decline to
ism coverage in some form, whereas a lesser percentage of purchase this coverage, one assumption is that smaller air-
small airport operators elect this coverage. Of airport opera- port operators do not perceive the risk of an event being as
tors that do elect coverage, the tendency is toward inclusion likely as do the larger airport operators. Acts of terrorism
in property and liability lines of coverage. Medium and large can be launched from any airport, however.
