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The attacks of September 11th produced staggering losses of life and property. They also brought forth substantial private-insurance payouts, as well as federal relief for the City of New York and for the families of individuals who perished on that day. The losses suffered during and after the attacks, and the structure of the relief effort, have raised questions about the availability of insurance against terrorism, the role of government in providing for, subsidizing, or ensuring the presence of such insurance, as well as the interaction between relief and the incentives for taking precautions against similar losses in the future. In response to such losses, and in anticipation of others, one might imagine an array of government responses ranging from nonintervention, to subsidized private insurance, to after-the-fact government payments of a fixed or uncertain kind.
Levmore et al. (Sat,) studied this question.