At a time when the economy is looking for significant capital investment, one of the major players, the insurance industry, may be put on the sidelines because of losses relating to the World Trade Center, according to Bradley J. Mortensen, founder and partner of Christie Pabarue Mortensen and Young, a Philadelphia-based law firm with a nationally-recognized insurance defense practice.
“The problem is that small reinsurers — those who insure the insurers of the general public against large losses — may have a high failure rate due to the losses associated with the tragedy,” says Mortensen, a nationally recognized insurance industry expert. “This has created quite a strain on the same companies that are struggling to pay asbestos and hazardous waste claims and ultimately, the insurance companies they insure — and the general public — will face the consequences.”
According to a report in The Philadelphia Inquirer, insurers expect to pay some $30 billion for life, property, health and workers’ compensation claims to families of the those killed or injured in the World Trade Center blast and to owners of the destroyed buildings, planes and other property. The report further states insurance companies may start running out of money should claims top $50 billion.
“I don’t have a crystal ball, but reaching that $50 billion figure doesn’t seem all that distant in light of the complexity and number of claims expected from the World Trade Center,” offers Mortensen. “And we can expect lengthy inter-insurance company battles to determine who is responsible to pay what to whom.”