Terrorism Insurance Coverage: The Market Impact on Insurers and other Exposed Industries

This article focuses on the evolution of the Terrorism Insurance Risk Act of 2002 and uses event study methodology to measure the effect of this legislation on the market price of the common stocks of insurers. This research goes a step further in that it concurrently measures the effect of legislative progress on the market prices of banks, utilities and airlines that are major insurance purchasers and that would be most affected by the federal backstop.