Thomas Wed 130pm Ven IV

8/12/2019 Thomas Wed 130pm Ven IV

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THE RENEWAL OF TRIPRAAND THE AMERICAN

TERRORISM EXPERIENCERAA Catastrophe Modeling ConferenceFebruary 2013

Pete Thomas

Chief Risk OfficerWillis Re

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A word from our lawyers

Willis Re Inc. is a reinsurance broker. Willis Re Inc. is not a law

firm. We do not give legal advice and nothing herein constitutesnor should be construed as legal advice. These ideas are offeredfor discussion purposes only and do not constitute legal advice.It is believed that the information used in creating thispresentation is correct, but no representations are made as to its

completeness or accuracy, nor are any warranties made as to itsfitness for any purpose. You and your legal advisors must makean independent assessment regarding all such matters.

Any comments or observations made herein are for academic

purposes only and are not for the purposes of reliance. Any suchcomments or observations do not reflect the views of WillisGroup Holdings or any of its affiliates or any of its subsidiaries orany of its clients.


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Renewing TRIPRA will be alot of work in 2014

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Washington not in the mood for another bail out

Parts of the country without target exposures dontthink its their problem

Conservatives (and think tanks) believe in private

market solutions Politicians and academics, however, are starting to

appreciate that the (re) insurance industry may nothave the capital or the risk appetite to spreadcatastrophic terrorism losses (e.g., NCRBC)

A federal solution is needed


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TRIA 2002 TIRA EXTENSION 2005 TRIPRA EXTENSION

2007

Terminates December 31, 2005 December 31, 2007 December 31, 2014

Make available Must make available coverage forcertified acts of terrorism sameterms and conditions

No change No change

Covered acts Foreign terrorism in USA(including war for WC)

No change Foreign & domestic in USA (WCfor war)

Certification level $5 million No change No change

Program trigger $5 million $5 million through 03/31/06$50 million post 03/31/06$100 million 2007

$100 million

Covered insurance Commercial P&C Commercial P&C, excludes auto,burglary, surety, professionalliability, farm owners multi-peril

No change

Deductibles - % of direct earnedpremium

2005: 15% 2006: 17.5%2007: 20%

20%

Federal reinsurance quota share 2005: 90% 2006: 90%2007: 85%

85%

Industry retention for mandatory

recoupment

2005: $15 billion 2006: $25 billion

2007: $27.5 billion

$27.5 billion each program year

Cap on liability $100 billion No change No change

Terrorism Risk Insurance ActA fulcrum for creating balance


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TRIPRA is a national economic

and defense security issue

TRIPRA is part of our nations economicdefense platform

Post 9/11 it was an economicstimulus tool

Insurance market stability, pricing

consistency, and capacity at risk ifTRIPRA is not extended

Major multi-year developmentprojects at risk if TRIPRA is notrenewed

TRIPRA is not a bailout the recoupmentprovisions place the ultimate burden oninsurers

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Todays talk:

The basic tools for the job

Two centuries of foreign policy

and todays transnationalterrorism

Globalization and the fourwaves of terror

How terrorism ends

Terrorism in America

The precautionary principle

Balance

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Pax BritanniaPax AmericanaAnglo-American World Order

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Foreign policy andtodays transnational terrorismBalfour Declaration

8Source: http://upload.wikimedia.org/wikipedia/commons/c/cd/Balfour_portrait_and_declaration.JPG


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In some parts of the world

The tribe is the critical political unit the nation state is an imposed andartificial geopolitical construct

Religion is a revealed, divine, comprehensive cohesive, spiritual, moral,political, personal, legal and political system there is no separation ofchurch and state

Western democracy is not the preferred form of government Local western foreign policy objectives are perceived to conflict with

western ideals (e.g., Muslim Brotherhood and Hezbollah)

Globalization and technology are perceived to undermine traditional

religious values Globalization is perceived as an extension of colonial exploitation

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Globalization and the four

waves of terror

David C. Rapports The Four Waves of Modern Terrorism

Anarchist Wave (1880s to 1920s)Anti-colonial Wave (1920s to 1960s)New Left Wave ( 1960s to 1980s)

Religious Wave (1979 to )

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Anarchist Wave

Modern terror began in Russia in the 1880s

Anarchist initiated the wave

Took advantage of revolution in communication &transportation

Women: Leaders and operators Tactic: assassinations

Weapon: bombs

Propaganda of the deed

Formalized doctrine and tactics

Revolutionary Catechism by Sergei Nechaev11


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Anti-Colonial Wave

The Versailles Peace Treaty

Victors applied Wilsonian principle of self determinationto break up defeated empires

Undermined their own empires as terrorist groups emerged

in all empires except the Soviet Union WWII enlarged self determination theme as both victors

and losers abandoned territory

Terror campaigns fought where withdrawal not an optionPalestine, Algeria, Northern Ireland

Tactics: eliminate police, hit and run, diaspora sponsors

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Left Wing Wave

Viet Nam War

Internationalism Vanguards for the masses (American Weather

Underground, West German Red Army Faction, Red

Brigade, Japanese Red Army, French Directe) Women: leaders and fighters

Tactics: theatrical targets, hostages, and

assassinations- Americans favorite targetsBetween 1968 and 1982 there were 409

international kidnappings incidents in 73 countriesinvolving 951 hostages

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Religious Wave

Religious doctrines and ethnic identities overlap

Anti- colonialism and secular nation state Islam influencing other religions

Sikhs, Jewish, Aum Shinrikyo, Christian Identity Iranian Revolution

1979 storming of the Grand Mosque in Mecca

Sunni terrorism

Collapse of the Soviet Union

The far enemy

9/11 and aftermath 14


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Religious transnational

terrorism may be different

They have a good powerful story that will survive

generations and appeal to the disenfranchised This story requires a different model with a longer time

frame to put its appeal into perspective.

Historical models to consider 16th and 17th century European Wars of Religion

The Cold War (1917 1991)

The Wars of Decolonization (1945 1997) Islamist political theorists posit a utopian theory of

government that differs from the western view of the

nation state and the separation of church and state


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Influential Islamic thinkers

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Hassan al BannaMuslim Brotherhood

Grand AyatollahRuhollah Khomeini

Sayyid Qutb with the President ofthe Colorado Teachers College


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How terrorism ends

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ecapitation Negotiation Success

ailure Repression Reorientation


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Terrorism in America

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Since the 1700s The

forecast is always stormy

1800s: Europe, UK discounted American experiment

Paid tribute to North African countries1930s: Fascists and totalitarians dismissed us

1950s: Communism will bury us

1970s: The revolution was coming

1980s: Japan & Europe will bury America economically

1990s: The Asian tigers will eat our lunch

2001 : Jihadist caliphate

2010 : China and India will overcome America

2012 : We are bankrupt


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Bombardment of Tripoli-

August 1805


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Unfortunately, terrorism since thefounding of the Republic has been

part of the American experience

The Haymarket Bombing (May 1886)labor

Assassination of Pres. McKinley (Sept 1901)anarchistBombing of US Senate (July 1915)Anarchist bombings of 1919, simultaneous attacks over

half the nationresulted in famous Palmer RaidsBudas wagon Wall Street (Sept 1920)anarchistNazi raid on New York (June, 1942)

PRNPattempt to assassinate Pres. Truman (Oct 1950)PRNP attack on US House of Representatives (Mar1954)

Source: Terrorism on American Soil, Joseph T. McCann, 2006 Sentient Publications


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Unfortunately, terrorism since thefounding of the Republic has been

part of the American experience

Bombing 16th Baptist ChurchKKK (May 1963)

FALN bombing attacks of 1975 (Fraunces Tavern)Bombing of US Senate (Nov 1983)Armed

Resistance Unit

Dalles, Oregon, Americas first biochemical attack(Aug 1984) Rajneeshpuram cult1993 World Trade Center Bombing

Oklahoma City Bombing (Apr 1995)Right Wing9/11Source: Terrorism on American Soil, Joseph T. McCann, 2006 Sentient Publications


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50 foiled plots

Richard Reed December 2001

Jose Padilla- May 2002

Lackawanna Six- September 2002

Lyman Faris May 2003

Virginia Jihad Network June 2003

Nuradin M. Abdi November 2003

Dhirn Barot August 2004

James Elshafay & Shahawar MartinSiraj August 2004

Yassin Aref and MohammadHossain August 2004

Hamid Hayat June 2005

Levar Haley Washington, GregoryVernon Patterson, Hammand Riaz and

Kevin James August 2005 Michael C. Reynolds December 2005

Mohammad Zaki Amawi, MarwanOtheman El-Hindi and Zand WassimMazloum February 2006

Syed Haris Ahmed and Ehsannul IslamSadequess April 2006

Narseal Batiste, Patrick Abraham,Stanley Grant Phanor, NaudimarHerrera, Burson Augustin, Lyglenson

Lemorin and Rothshild Augstine June2006

Liquid Explosives Plot August 2006

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Source: 50 Terror Plots Foiled Since 9/11: The Homegrown Threat and the Long War on Terrorism.

James J. Carafano, PH.D, Steven P Bucci, Ph.D and Jessica Zuckerman, Heritage Foundation, April25, 2012


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50 foiled or failed plots

Khalid Sheikh Mohammed- March2007

Fort Dix Plot May 2007 JKF Airport Plot June 2007

Christopher Paul June 2008

Syngogue Terror Plot - May 2009

Raja Lahrasib Khan March 2010

Faisal Shahzad May 2010

Paul G. Rockwood,Jr. & NadiaPiroska Maria Rockwood- July 2010

Farooque Ahmed- October 2010

Air Cargo Bomb Plot October2010Mohamed Osman Mohamud-November 2010

Antonio Martinez December 2010

Kalid Ali- M Aldawsari

Ahmed Ferhani and MohamedMamdouh- May 2011

Abu Khalid Abdul-Latif and WalliMujahidh June 2011

Emerson Winfield Begolly August2011

Rezwan Ferdaus September 2011

Iranian Terror Plot October 2011

Jose Pimentel November 2011

Sami Osmakac January 2012

Amine El Khalafi February 2012

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Source: 50 Terror Plots Foiled Since 9/11: The Homegrown Threat and the Long War on Terrorism.James J. Carafano, PH.D, Steven P Bucci, Ph.D and Jessica Zuckerman, Heritage Foundation, April

25, 2012


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Boston Marathon bombings

26Source: Stratfor


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Hello, Unit 61398

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China claims cyber attacks

from US based hackers

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DOS and DDOS attacksAre cyberattacks afirst rate

terrortool?

No Government

No Power

No Banking

No Communication


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Just a thought

MAD - the bipolar global framework that prevented rational

leaders from immolating the globe does not seem feasible incyber space or the URW world

Cyberspace is extra territorial there seems to besignificant problems, even in major attacks, identifying the

enemy or distinguishing between terrorism and war

China and Iran are developing significant cyber capabilities

China and the US have a commonality of interests that may

create a political limit on cyber attacks - there are no suchself interest driven restraints with Iran


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Leaving cyberspace:The Southern Poverty Law Justice

Center in 2012 tracked

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1 007 Hate Groups1 360 anti-government Patriot Groups


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American terrorism today

Southern Poverty Law Justice Center watches almost 1,018 UShate groups

Patriot Groups on the rise Militia Groups on the rise Hate groups in every state

Anti-Muslim, anti gay, Black Separatist Groups, ChristianIdentity Groups, KKK, Nativist Extremist Groups, Neoconfederate, Racist Skinhead, White Nationalist

Environmental terrorism

Private law as an anti-terror tool

Source: Southern Poverty Law Justice Center


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A short list of hate groups

34Source: http://www.splcenter.org/get-informed/intelligence-files/groups


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SPL: Patriots & Militia

Groups

35Source: Southern Poverty Law Justice Center


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Radical environmentalist

movement

Two best know groups - $110M damage (1995 to2005)

Animal Liberation Front (ALF)Earth Liberation Front (ELF)

Operation BackfireThe Family

Five states in Pacific Northwest, 20 criminal

acts, 18 members, $40M in damageSuccessful counterterrorist operation

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We are facing an array of

threats but

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It is important to keep suchthreats in perspective

Threats and problems are real


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Threats and problems are realbut weve overcome worse seeWorld War II


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Putting terrorism in the

United States in perspective

9/11 cost US$80B to US$90B

A small percentage of the US GDP of US$10trillionIt is anticipated that the US is sufficiently strong to

withstand most terrorist attacks with few economicconsequences

The effect on macro economic policy is criticalIt is the danger of persistent overreaction that is thereal danger

SOURCE: Economic Consequence of Terrorism in Developed and Developing Countries, ToddSandler and Walter Enders, 2008.


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Worse case thinking

The precautionary principle

Imagining the worst outcome and treating it like acertaintyFocuses on extreme but improbable risks

Movie plot thinkingAntidote

Probabilistic thinking

Reasonable approaches There are, however, threats

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Things to consider in the

quest for balance

Terrorism has been andwill continue to be around

for a long time Globalization,

demographics and thefinancial crisis anddemographics will createnew pools of prospects


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Civil Defense: where do you

invest limited resources?

Most U.S. terrorist activities arenon-catastrophic

Catastrophe terrorism events,however, need the federalgovernment to spread the risk

Un-insurable: Nuclear,Chemical, Cyber, Radiological,Biological ?

The importance of renewingTRIA in 2014

Picture: 1918 30,000 men under Brig. Gen Laubock

Thomas Wed 130pm Ven IV

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