RAND Report Details 9-11 Victims Compensation

RAND Report Details 9-11 Victims Compensation Dateline: January, 2005 A study released by the RAND Corporation shows that victims of the Sept. 11, 2001 terrorist attacks - both individuals killed or seriously injured and individuals and businesses impacted by the strikes - have received at least $38.1 billion in compensation, with insurance companies and the federal government providing more than 90 percent of the payments. New York businesses have received 62 percent of the total compensation, reflecting the broad-ranging economic impacts of the attack in and near the World Trade Center. Among individuals killed or seriously injured, emergency responders and their families have received more than civilians and their families who suffered similar economic losses. On average, first responders have received about $1.1 million more per person than civilians with similar economic loss. The 9-11 terrorist attacks resulted in the deaths of 2,551 civilians and serious injury to another 215. The attacks also killed or seriously injured 460 emergency responders. â€Å"The compensation paid to the victims of the attacks on the World Trade Center, the Pentagon and in Pennsylvania was unprecedented both in its scope and in the mix of programs used to make payments,† said Lloyd Dixon, a RAND senior economist and lead author of the report. â€Å"The system has raised many questions about equity and fairness that have no obvious answers. Addressing these issues now will help the nation be better prepared for future terrorism. Dixon and co-author Rachel Kaganoff Stern interviewed and gathered evidence from many sources to estimate the amount of compensation paid out by insurance companies, government agencies and charities following the attacks. Their findings include: Insurance companies expect to make at least $19.6 billion in payments, comprising 51 percent of the money paid in compensation.Government payments total nearly $15.8 billion (42 percent of the total). This includes payments from local, state and federal governments, plus payments from the September 11 Victim Compensation Fund of 2001 that was established by the federal government to compensate those killed or physically injured in the attacks. The total does not include payments to clean up the World Trade Center site or rebuild public infrastructure in New York City.Payments by charitable groups comprise just 7 percent of the total, despite the fact that charities distributed an unprecedented $2.7 billion to victims of the attacks.Because of concerns that liability claims would clog the courts and create further economic harm, the federal government limited the liability of airlines, airports and certain government bodies. The government established the Victim Compensation Fund to m ake payments to families for the deaths and injuries of victims. In addition, the government funded a major economic revitalization program for New York City.RAND researchers found that businesses hurt by the attacks have received most of the compensation that the study was able to quantify. The families of civilians killed and the civilians who were injured received the second-highest payments. The study found that: Businesses in New York City, particularly in lower Manhattan near the World Trade Center, have received $23.3 billion in compensation for property damage, disrupted operations, and economic incentives. About 75 percent of that came from insurance companies. More than $4.9 billion went to revitalize the economy of Lower Manhattan.Civilians killed or seriously injured received a total of $8.7 billion, averaging about $3.1 million per recipient. Most of this came from the Victim Compensation Fund, but payments also came from insurance companies, employers and charities.About $3.5 billion was paid to displaced residents, workers who lost their jobs, or others who suffered emotional trauma or were exposed to environmental hazards.Emergency responders killed or injured received a total of $1.9 billion, with most of that coming from the government. Payments averaged about $1.1 million more per person than for civilians with similar economic losses, with most of the higher amount due to paym ents from charities.​ Certain features of the Victim Compensation Fund tended to increase compensation relative to economic loss. Other features tended to decrease compensation relative to economic loss. Researchers say more detailed individual data are needed to determine the net effect. For example, the Victim Compensation Fund decided to limit the amount of lost future earnings it would consider when calculating awards for survivors. Administrators capped income the fund would consider at $231,000 per year in projecting future lifetime earnings, even though many people killed earned more than that amount. The special master of the Victim Compensation Fund had substantial discretion to set final awards for higher income earners, but data are not available on how he exercised that discretion.