In the next 2 posts I’d like to talk about a newer form of insurance called Loss of Attraction Insurance.
This coverage is for businesses that may lose a substantial amount of income due to being located by an airport. As you will learn, any business located near a prime terrorist target will benefit from this coverage.
The threat of terrorist attack can cause flight cancellations and even airport shutdowns. This in turn can cause a major loss of income for nearby businesses.
Places such as stores, restaurants, hotels, resorts and other businesses related to travel are at risk. That lost income can cripple larger businesses and destroy smaller ones.
In answer to this need, along comes Loss of Attraction Insurance. Having this coverage can provide businesses some form of security against the losses possible from an airport terrorist attack.
Any business that relies on air travelers already knows what a disaster an airport attack would be.
Why Airports Attract Terrorists
There are a thousand places that a terrorist could plan an attack. Why then, do they love airports so?
The answer may be simpler than you realize. Airports are deliberately designed to allow access to a lot of people from a lot of different countries.
Any attack will not only create headlines in that country, but also in the countries of any affected passengers.
Today’s major airports are handling far more passengers than ever before. Air travel has become commonplace. But, after the 2016 attack in Istanbul and the 9/11 attack in NY, security has gotten tighter on airliners.
Upgraded security in airliner cockpits has all but eliminated hijackings. Other security improvements have now made it extremely difficult to get explosives or any weapon, onto planes.
Because of these changes, terrorists are now targeting the airport itself. Whether it’s the ticket desk, check-in or baggage claim, these places all attract hard-to-protect crowds of people.
No matter where these attacks take place, they still make people scared and fear has a cost. This costs starts with a reduction in air travel, then tourism and it finally affects the economy. Without Loss of Attraction Insurance coverage, it could signal the end of many businesses.
One study of LAX (Los Angeles Int. Airport) has shown a $10 billion loss in profit. This loss is from just one hypothetical attack at a terminal, which kills 20 people and injures 98.
The whole effect of this one attack trickles down to many businesses. As an example, if there is a reduction in air travel, then airplanes spend less on jet fuel. Therefore there will be less petroleum refining and less production. Less work means less workers, less money coming in, less being spent, etc.
This same chain of events and damage to the economy would happen after any major terrorist attack. The victim of the attack would not be the only business hurt. So, why don’t we just stop these attacks? Let’s see why that is easier said than done.
Why Preventing Terrorist Attacks is so Difficult
When it comes to airports, the first thing to remember is that people love to fly. The International Air Transport Association predicts the number of airline passengers will almost double by 2035.
Passenger numbers are expected to reach 7.2 billion, from the current 3.8 billion. That means protecting a lot of people, over a very large area 24 hours a day, every day.
Limits of Airport Terror Liability
Airport attacks create potentially unlimited liability for one specific business, the airport security provider. But what would happen if that same terrorist attack also cost hundreds of businesses millions of dollars?
Companies with no insurance to recover lost revenue would probably sue the airport security provider for negligence. They would be looking to recover their lost revenue, of course.
However, the SAFETY Act, passed after the 9/11 attacks, protects airport security providers from terror-related claims. The SAFETY Act states that any company using qualified anti-terrorism technologies cannot be sued in response to a terror attack.
This waiver also includes the buyers, buyers’ contractors and downstream users of the qualified anti-terrorism technologies.
The law encourages companies to develop anti-terror technologies by protecting them from lawsuits. But at the same time it makes it very difficult for other companies to get help. If your company suffers business loses due to an airport terror attack and you’re without Loss of Attraction Insurance, you’re on your own.
If you are a business close to an airport or any other potential terror target and don’t have Loss of Attraction Insurance, we can help. Would your business be negatively affected following a terrorist attack, we can help. Whether you’re looking for coverage now or just need some information, MrInsurability is only a click away!