Terrorism insurance, an industry that did not exist in America before September 11, 2001, is on the upswing these days, with companies offering coverage for property damage and loss of revenue when nightmares bleed into reality. Today, 62 percent of businesses in the US have some form of terrorism insurance, according to Bob Hartwig, president of the Insurance Information Institute, a nonprofit consumer group intended to help people better understand the industry.
And experts expect that number will only increase in the wake of the recent mass shootings in San Bernardino and Colorado Springs.
"It's an axiom in the world of insurance that nothing sells insurance against tragedy like a tragedy," Hartwig says. "If instead of a terrorist attack in San Bernardino, we had a major earthquake, I can assure you there would have been a surge in purchases of earthquake coverage."
Fear translates into cash, and companies like Marsh, one of the largest insurance brokers in the world, usually see a spike in business immediately following news reports of a terrorist attack.
"The number of questions increases, the number of requests, adding terrorism coverage," explains Tarique Nageer, who heads Marsh's property terrorism division in New York City. "The what-if scenario: 'What if this happens to us?'"
With recent attacks on soft, non-military targets, like in Paris and San Bernardino, more businesses are feeling vulnerable. And while terrorism insurance is still a relatively young phenomenon in the United States, other countries like the United Kingdom—with its history of Irish Republican Army (IRA) bombings—and Israel have had it for some time.
After the September 11 attacks, though, America's terrorism insurance game quickly got traction.
"It was an exciting time because it was a very active marketplace," Nageer recalls. "Banks were requiring policies to have terrorism insurance… people didn't get loans to do construction projects [without it]."
The attacks on the World Trade Center and the Pentagon more than 14 years ago resulted in over $24 billion in insured property loss. In 2002, President George W. Bush signed the Terror Risk Insurance Act into law, creating a government safety net so payouts wouldn't put companies out of business in case of a similar catastrophe.
Under the law, however, the definition of a terrorist attack is rather precise, and contingent on damage of at least $5 million, as determined by the US Treasury Secretary.
The shooting in San Bernardino was quickly dubbed terrorism by the FBI. And on Thursday, Enrique Marquez, Jr., friend and former neighbor of San Bernardino shooter Syed Rizwan Farook, was charged with conspiring to provide material support to terrorists, along with two other counts. The criminal complaint alleges Farook introduced Marquez to "radical Islamic ideology" and that Marquez bought the AR-15 style rifles used in the shooting, as well as explosive materials that were used to make a pipe bomb which was found at the scene.
Nonetheless, the shooting might not qualify as terrorism from an insurance standpoint—"even if everyone in the universe agrees it's an act of terror," according to Hartwig.
"That's essentially what happened in Boston," with the bombing at the local Marathon in 2013, he says. "You had a couple of pressure cooker bombs that blew up in the street. They did some damage to businesses, but those losses did not total $5 million."
Nor does the law cover loss of life, unless a person is killed on the job, as in the case of rescue workers.
For companies that have terrorism insurance but don't meet the government's $5 million threshold after an attack, it's up to the insurance adjusters who assess damage on the ground to determine if any given incident qualifies as terrorism. Factors include whether the act causes fear, property damage, and whether it was motivated by politics, religion, or ideology.
"It doesn't have to be ISIL or al Qaeda," explains Nageer. "It could be someone going after Planned Parenthood, animal rights activists."
So far, the federal terrorism program has never been used. Even if damage were to exceed $5 million, federal money wouldn't kick in until a loss was valued at $100 million. Without having to pay out large claims, insurance companies have dropped rates over the past few years—and still raked in a steady profit.
Hartwig predicts a continued spike in sales for businesses in smaller cities throughout the country, especially after the attacks in San Bernardino and Colorado Springs—neither of which exactly qualifies as a global metropolis.
"We see that after a flooding," he says. "They have a heightened awareness of a threat because of their vulnerability and they go out an immediately purchase coverage."
Cole Kazdin is a writer in Los Angeles.