Insurers Expected to Pay $15 Billion to Clean Up, Rebuild NYC

April 26, 2002

According to a new study released by the Federal Reserve bank of New York, cleaning up and rebuilding downtown Manhattan is expected to cost up to $29 billion, at least $6 billion less than had been estimated earlier.

As reported by the Associated Press, insurers are expected to pay around $15 billion of the $25 to $29 billion total, leaving approximately $10 to $14 billion in uninsured costs. Various sources will be called upon, including Federal and State disaster relief funds together with private sector investment to make up the difference.

A number of factors combined to lower the initial cost estimates, which had ranged as high as $35 billion. The report concluded that New York City was in better fiscal shape after the Sept. 11 attacks than had first been thought. In addition the cleanup has proceeded more rapidly than anticipated, which has reduced costs.

The report attributed $4.5 billion in lost income to the attacks. The AP report quoted Federal Reserve Bank President William McDonough as stating that the figure was “far below estimates that we would have made a few weeks after the attack.”

The Federal Reserve also found that NYC had already lost around 50,000 jobs prior to Sept. 11, and some 50,000 more private jobs were lost after the attacks. Another 20,000 were lost in early 2002. In addition around 100,000 city workers were displaced by the attacks. However, according to McDonough, due to the swift recovery in the economy nationally the job picture should improve in New York City by the middle of the year.

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