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18 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.