Compensating Victims of Terrorism

Compensating Victims and Allocating Responsibility for Prevention and Response: 
Programmatic Alternatives

The 9/11 Fund is regularly - and rightfully - credited with providing compensation in a more reliable, faster and a less adversarial manner than the tort suits it supplanted.  However, the fund also raised numerous policy issues regarding equitable compensation.  What is the policy rationale for distinguishing between victims of terrorism, crime, natural disasters and war?  What policy rationale supports the varied treatment of victims based on circumstances of the attack?  For example, the efforts on behalf of 9/11 victims differ significantly from those on behalf of the Oklahoma City bombing victims.  Are secondary and tertiary victims entitled to compensation?  How should victim compensation funds be funded?  Does the 9/11 Fund precedent obligate the federal government to engage in similar efforts following another attack?  The overarching question is whether, considering the inevitability of future attacks, the nation should embrace a comprehensive policy of victim compensation or respond to each event on a case-by-case basis. 

Beyond the complexities of creating a fund, the very existence of a government-funded program raises important questions about the role of tort remedies in allocating responsibility for providing security.  The 9/11 Fund was created to limit victims’ tort suits that Congress believed would disproportionately burden the airline industry.  At the same time, Congress took responsibility for ensuring the investigatory and deterrence benefits of the tort proceedings it had supplanted.  Whether this shift in enforcement power was proper and whether the efforts were sufficient is the subject of some debate, but Congress continues to intervene to address the questions that 9/11 raised about the standard of care for providing security for employees and customers.   How extensive is that duty?  What is a foreseeable terrorist threat?  What is a foreseeable use of a security product or service? 

Congress has responded to these changes by granting liability protection for a number of businesses.  The Support Anti-terrorism by Fostering Effective Technologies Act of 2002 provides significant liability limitations in order to promote the development and deployment of anti-terrorism technologies.  The Public Readiness and Emergency Preparedness Act of 2006 alleviates liability concerns related to the manufacture, testing, development, distribution, administration and use of countermeasures against chemical, biological, radiological and nuclear agents of terrorism.  At the same time, Congress has fostered the growth of terrorism insurance to ensure coverage for most property and economic loss due to a terrorist attack.  The Terrorism Risk Insurance Act of 2002 requires all property and casualty insurers to offer terrorism insurance to policyholders at terms similar to those for other events.  The Federal government shares the risk of loss, covering 90% of the insurers’ losses up to $100 billion. Did Congress strike the proper balance in these statutes?  Did Congress otherwise adequately provide the benefits of the tort actions it restricted?  Does the analysis change when we examine these statutes collectively?  What can we learn about the likely effect on victim compensation from other liability-limiting compensation models, like the Vaccine Injury Compensation program? 

INSCT is gathering academic and policy experts and practitioners to develop a set of principles and concrete guidelines for establishing future compensation schemes and determining the scope of liability for commercial entities affected by a terrorist attack.