- The Washington Times - Friday, September 14, 2001

Insurance companies yesterday began reviewing claims resulting from the terrorist attack in New York and assuring businesses that the industry can cover the estimated $10 billion to $15 billion in losses.
Several leading European insurers, including Munich Reinsurance, Swiss Reinsurance and Allianz, said combined the damage will cost them nearly $3 billion. Canada's Manulife Financial Corp., which sells life insurance to wealthy individuals in New York and insures about a third of the reinsurance contracts for life and health policies in the United States, said its tab would be at about $64 million.
Thousands of people are believed to have been killed after two hijacked planes slammed into the World Trade Center Tuesday, demolishing the two 110-story office towers. Another plane crashed into the Pentagon, but no claims will result from there, as the Pentagon is federally insured. It is likely claims will also arise from the fourth hijacked airliner that crashed in a Pennsylvania cornfield.
The terrorist attack is being called the third-most expensive disaster in American history. Hurricane Andrew currently tops that list, having cost insurers about $18 billion when it hit Florida in 1992. An earthquake that shook Northridge, Calif., in 1994 ranks second, doing almost as much damage as Andrew.
The biggest insurance losses from a man-made disaster were $775 million from the Los Angeles riots in 1992; The bombing of the World Trade Center a year later resulted in $510 million in claims.
Losses resulting from Tuesday's terrorist attack are likely to have a less severe impact on the industry, because claims are not strictly about property damages, but spread across several types of policies, industry observers explained. Also, not a handful but many insurers from various part of the world had clients in the World Trade Center.
The twin towers are valued at $1.2 billion, according to property broker CB Richard Ellis. Including neighboring buildings, losses could reach $2 billion, insurance experts said.
Then there are losses from claims on liability coverage for airlines, workers' compensation claims, life insurance, auto insurance for vehicles damaged by falling objects or destroyed in underground garages, and property losses for furniture and office equipment.
Perhaps the greatest damage will stem from business interruption claims, said Bob Hunter, chief insurance expert with the Consumer Federation of America.
"Some of these major financial institutions that were housed in the World Trade Center … had major interruption in business," he said. "I think obviously they backed up computer systems, but they are going to have lots of difficulty having these people relocated. It will be a while before they are back to any kind of normal operations."
The U.S. insurance industry, with $3 trillion in assets and about $850 million in annual revenue, is stable enough to handle any number of claims resulting from Tuesday's terrorist attack, according to a statement of the National Association of Insurance Commissioners.
The nation's fourth-largest insurer, the St. Paul Cos., is already receiving claims, said spokesman David Monfried.
"We insure many businesses in the World Trade Center," he said. "But we're certain that with our strong balance sheet and the reinsurance arrangements, we have in place that we'll be able to handle claims comfortably."
Some 450 employees of the St. Paul Cos. escaped unharmed from a building near the twin towers Tuesday. Five workers for another insurer, AllState Group of Northbrook, Il., which had an office in one of the towers, also were unharmed.
Laura Margolis, spokeswoman for the company, said AllState insures two offices at the World Trade Center, including its own.
"AllState will pay on life, auto and property claims," she said.


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