By Peter Rousmaniere
The failure to renew the Terrorism Risk Insurance Act (TRIA) – first enacted in 2002, renewed in 2005 and 2007 – raises two questions: Who would have benefited from renewal, and who is harmed by non-renewal, with regards to workers’ compensation?
Workers did not benefit from TRIA. They may benefit from its non-renewal. For them, TRIA was useless.
For workers’ compensation insurers, TRIA simplified their management of risk and now they have to work harder. TRIA was, when you peel away the onion, about insurers taking care of their markets. Every other consideration appears to be secondary.
The impact of non-renewal on employers is ambiguous. Their risk management is now trickier, but they may come to see how poor a deal the federal backstop was for their employees.
TRIA mandated no expansion, clarification or revision of state workers’ compensation statutes, in coverage and process. After claim payers incurred a specified threshold of losses, the Federal Government was to begin to help fund further losses. (This is a very simplified but I think fair summary.)
Throughout the history of statute, including the legislative debates and published studies, few, if any, took the time to ask some fundamental questions:
- What nature of conditions could arise from a terrorist attack?
- Do workers’ compensation statutes cover these conditions?
- For conditions that are covered, is there a reasonable chance that affected workers will obtain adequate benefits?
Answers to these questions were available to anyone who wished to ask them. In 2003 I visited with a senior executive of the American Insurance Association and came away with a strong impression that the AIA was not interested in asking. About that time I also asked the National Council for Compensation Insurance about its model for predicting losses and learned that it was proprietary. The Federal Government did not run its own model; I was told at the time that the Insurance Industry nixed the idea.
It is reasonable to expect that terrorists primarily want to (1) scare the wits out of Americans and (2) lure the United States into military quagmires. Physical harm for them is useful if it achieves these goals. This week, the mere prospect of an attack at one of thousands of theaters screening “The Interview” on Christmas Day was enough to propagate shock waves.
Mental health conditions such as PTSD are therefore central to an assessment of occupational risks of terrorism. In 2002, the Association of Workers’ Compensation Professionals analyzed the mental stress provisions in state laws and found a thicket of prohibitions, hard-to-fathom distinctions, and contradictions. A terrorist attack at Peachtree Plaza in Atlanta would lead to almost every PTSD claim being denied because Georgia does not recognize mental-mental claims.
Consider, too, disease claims. It is commonly known that workers’ compensation disease claims face procedural barriers in obtaining awards, and that these barriers have become higher in the past 25 years. For many recovery and cleanup workers at Ground Zero in New York, disease claims (such as those that arose from dust) faced hurdles so high that state legislation was required to ease their path. It took five years for the New York State Legislature to enact these amendments.
The insurance industry has never done a serious study of the work injuries and fatalities that would arise from a terrorist attack. They have not over the years used a workers’ compensation specific model, which would be a necessary step to produce reliable estimates. Rather, they reheated a property loss model and inferred a relationship between the severity of property loss and work fatalities and injuries.
To my knowledge, the insurance industry has never discussed with government officials how current laws complicate coverage for terrorism-related conditions, and that workers have to crawl across a hundred feet of glass shards to obtain benefits.
Workers are plausibly better off without TRIA because insurers are no longer dominating the backstop debate in Washington, asserting that they speak for the worker. Perhaps state legislatures can now directly address the complicated benefit picture.
About Peter Rousmaniere
Peter Rousmaniere is a journalist and consultant in the field of risk, with a special focus on work injuries. Peter is an award-winning author of some 200 articles on many aspects of workers compensation. He is a columnist for WorkCompCentral. Holding an MBA from Harvard Business School, Peter has been in the workers’ compensation field for 25 years. He resides in Woodstock, VT, a picturesque New England village. Email: firstname.lastname@example.org.