TY  - JOUR
AU  - Brown,Jeffrey R.
AU  - Cummins,J. David
AU  - Lewis,Christopher M.
AU  - Wei,Ran
TI  - An Empirical Analysis of the Economic Impact of Federal Terrorism Reinsurance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10388
PY  - 2004
Y2  - March 2004
UR  - http://www.nber.org/papers/w10388
L1  - http://www.nber.org/papers/w10388.pdf
N1  - Author contact info:
Jeffrey R. Brown
Department of Finance
University of Illinois at Urbana-Champaign
515 East Gregory Drive
Champaign, IL 61820
Tel: 217/333-3322
E-Mail: brownjr@illinois.edu

David Cummins
Wharton School
University of Pennsylvania
3620 Locust Walk
3303 Steinberg Hall-Dietrich Hall
Philadelphia, PA 19104-6302
Tel: 215-898-5644
Fax: 215-898-0310
E-Mail: cummins@wharton.upenn.edu

Christopher Lewis
P&C Chief Risk Officer
The Hartford Financial Services Group
55 Farmington Avenue, Suite 700
Hartford, CT 06115
Tel: 860-547-3117
Fax: 860-547-4886
E-Mail: Chris.Lewis@thehartford.com

Ran Wei
Dept. of Insurance and Risk Mgmt.
University of Pennsylvania
3641 Locust Walk, Wharton School
Philadelphia, PA 19104
E-Mail: rwei@wharton.upenn.edu
AB  - This paper examines the role of the federal government in the market for terrorism reinsurance. We investigate the stock price response of affected industries to a sequence of thirteen events culminating in the enactment of the Terrorism Risk Insurance Act (TRIA) of 2002. In the industries most likely to be affected by TRIA    banking, construction, insurance, real estate investment trusts, transportation, and public utilities    the stock price effect was primarily negative. The Act was at best value-neutral for property-casualty insurers because it eliminated the option not to offer terrorism insurance. The negative response of the other industries may be attributable to the Act's impeding more efficient private market solutions, failing to address nuclear, chemical, and biological hazards, and reducing market expectations of federal assistance following future terrorist attacks.
ER  -