Case | HBS Case Collection | March 2003

Insurer of Last Resort? The Federal Financial Response to September 11

by David A. Moss and Sarah A. Brennan

Abstract

Examines the federal financial response to September 11, 2001: the airline bailout, the victim compensation fund, emergency aid to New York and Washington, and terrorism reinsurance. Less than two weeks after the attacks, the government had committed almost $40 billion to relieving the victims and safeguarding the economy. A little over a year later, these measures were joined by the creation of a federal terrorism reinsurance program, originally proposed by the White House in October 2001. On the surface, the federal financial response to September 11 was puzzling. Did the enormity of the attacks weaken the country's commitment to laissez-faire principles? Or is the traditional attitude toward government economic intervention in the United States more complicated than the phrase "laissez-faire" (or "free market") implies? Explores the appropriate role of government in managing risk and responding to disasters and then asks students to consider whether each of the various initiatives--and indeed the program as a whole--was a success or a failure.

Keywords: Business and Government Relations; Insurance; Risk Management; United States;

Citation:

Moss, David A., and Sarah A. Brennan. "Insurer of Last Resort? The Federal Financial Response to September 11." Harvard Business School Case 703-041, March 2003.