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Boston bombing presents big unknown for insurers

Boston bombing presents big unknown for insurers

While the effect of Monday's bombs that killed three people and injured 180 at the Boston Marathon won't be clear for the insurance industry until more is known about the attack, some legal and security experts think the event will lead to heightened security at public events and could prompt some challenging insurance coverage questions.

John N. Ellison, partner at the Reed Smith L.L.P. law firm in Philadelphia, said he thinks the shutdown of the bombing area by law enforcement officials as they conduct their investigation is likely to lead to business interruption and continent business interruption claims, or at least businesses putting their insurers on notice of potential claims. An issue, however, will be the effect of terrorism exclusions, he said.

“They have a fairly big swath of central Boston, which is right in the heart of the business district and certainly the tourism district, locked down,” Mr. Ellison said.

Most property and casualty coverages have terrorism exclusions, raising an interesting issue if the Secretary of the Treasury does not certify the Boston Marathon bombing as a terrorist act, as would be required to trigger the Terrorism Risk Insurance Act of 2002, Mr. Ellison said. “By the Secretary of Treasury never certifying this as an act of terrorism, does that mean this is terrorism for other coverages,” he wondered.

Francisco Quinones, managing director at Washington-based security consultant Arcis International L.L.C., said heightened security on high-profile sites and landmarks since the Sept. 11, 2001, terrorist attacks have led terrorists to look for easier targets that will still garner widespread media attention.


“The next targets of choice are easy targets and there's nothing easier to target than a sporting event like a marathon,” Mr. Quinones said. While stadiums have controlled entrances, a marathon takes place along 26.2 miles of open streets and is “very difficult to secure,” he said.

“Football stadiums, soccer stadiums, it's a lot easier because you have controlled entrances,” he said. Still, Mr. Quinones said, “I can guarantee you other sporting events will take additional measures.”

A former official of the federal Transportation Safety Administration said the attack should underscore that the terrorism threat has not diminished.

“I think the first thing is that it should serve as wake-up call and tell us that the bad guys are still hard at work and their mission to disrupt the American way of life remains active,” said Tom Blank, a former TSA deputy administrator and executive vice president of Gephardt Government Affairs in Washington.

“I also think it's surprising that events like this haven't happened previously,” he said. “I have no doubt that the perpetrators are going to be apprehended. The infrastructure that has been put in place — from camera surveillance to establishing joint terrorism task forces — is going to provide the intelligence that is necessary for law enforcement to do its job.”

Morris Taylor, associate professor of public administration and policy analysis at Southern Illinois University Edwardsville, said that in our society, “as a practical matter it's impossible to totally prevent these events from occurring.”


“We live in a very dangerous world,” Mr. Taylor said. “Terrorism's going to be with us in the foreseeable future, probably several generations. In terms of protection, I think the biggest protection is better sensitivity to our surroundings.”

Christine L. Eick, executive director of risk management and safety at Auburn University, said more information will have to emerge about Monday's tragic event before risk managers know how to respond in securing public events.

At Auburn, “There are some things that we already do. We already bring a bomb dog through our venues when we're having large events,” Ms. Eick said. “We do shut down and lock down certain areas prior to an event.

“We have a very stringent credentialing procedure. Not to say it's perfect. It's something we constantly look at,” the Auburn risk manager said. “We already have cameras and monitor a lot of the areas around our main venues.”

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