Municipalities will no longer be able to insure against terrorist attacks.
It is expected that during the next year insurance companies will adopt an exclusion clause for terrorism in the aftermath of the Sept. 11 attacks on the U.S.
"We do expect to see the terrorist exclusion as part of every companys policy," said Chuck Byrne, executive director of the Insurance Brokers of B.C.
Already the Municipal Insurance Association of B.C., which provides liability insurance to 154 local and regional governments, including Whistler, is busy renegotiating coverage for its members after alerting them last week to an exclusion for terrorism.
At the moment the exclusion only refers to third party aircraft insurance, said Jennifer Beresford, revenue officer for the RMOW.
So if a plane chartered by the municipality was used for a terrorist attack insurance would not cover any resulting claims.
However, said Beresford, Whistler only rents air transport a couple of times a year so it is a very small portion of the municipalitys insurance coverage.
But when the exclusion broadens to cover all terrorist attacks the RMOW will have to reconsider its options, said Beresford.
"Our polices dont come up until April 1 so what we have agreed to with our broker is that they will continue to shop the market for replacement coverage which is exactly the same as what we have right now," she said.
"If as we get closer certain portions of that are not available that is something we will have to consider separately."
It may be that those seeking this type of coverage will have to try and find enough money to insure themselves.
It is unclear what if any coverage could be purchased to hedge against attacks at controversial conferences or even the Olympic Games.
And its unknown whether a terrorism exclusion clause would also rule out payments for eco-terrorist attacks.
In the last year or so several attacks of this nature have occurred in the Pacific Northwest. In Oregon a Chevrolet dealership has twice been a target, with SUVs set on fire. Logging trucks have also been set on fire and even a seed-testing facility has been targeted.
Byrne, of the Insurance Brokers Association, said it may be that these types of attacks could be seen as vandalism rather than terrorism.
What we do know is that insurance companies all over the world are tearing up their disaster scenarios after the Sept. 11 attacks.
Until then Hurricane Andrew was the biggest single-event loss in the history of insurance, with $20 billion US paid out over-all.
For Whistler, change will not only be reflected in policies it will also be reflected in the cost of the insurance, which is sure to increase. While it is not clear at the moment by how much, some analysts are saying it will be at least 10 per cent. Currently the RMOW spends $315,000 on insurance.
Indeed every policy holder in the world will face fee increases shortly.
Many in the insurance business were getting ready to raise rates before the terrorist attacks to keep them in line with inflation, rising claim costs and a recognition that policy costs for catastrophic events were not in line with pay out costs.
Only strong competition was keeping prices down.
Earthquake insurance will almost definitely go up considerably in the future, said Byrne.
The increases stem from re-insurance. This is the coverage insurance companys buy themselves to protect against catastrophe.
Dozens of re-insurance companies will be dolling out the dollars to cover the cost of the attacks in September, which are expected to reach $80 billion.
It has been reported in the US media that 22 insurance and re-insurance companies will have to pay $3.55 billion US just to cover the physical destruction of the World Trade Center.
"One of the truisms of insurance is that the premiums of the many have to pay for the losses of the few and that will continue to be true," said Scott McBride, director of insurance services for the B.C. Automobile Association.
"Your average home insurance policy, the price will go up by double digits and that is going to surprise some people, and people will want to know how to manage that."
McBride said homeowners should keep small claims to a minimum and consider paying a higher deductible to offset increases in price.