Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 0
Interesting article.

One of the things that interests me about the process of attempting to integrate some kind of insurance-coverage model into terrorism is the degree to which models like the one in this article take into account any sort of consequential damages. Is $40 billion the actual physical damage plus some allowance for the people who were killed and the direct lost work time for those displaced by the attacks? Does it at all take into account the fact that no one I know was particularly productive for the week following? Indeed, should it?

The best example I've seen of taking a large portion of consequential damages into account was the Y2K insurance craze. I'm not sure whether or not this was the result of poorly written policies that insurers concluded would force them to pay Y2K-related claims. I wonder, however, how much good a model of direct consequences of an attack does for the economy as a whole - in other words, how much of the effect of an attack is direct?

I definitely agree with the author that the assumption that an attacker is a rational, "value"-maximizing individual is sketchy at best.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.