Insurers from around the world have strongly condemned Tuesday’s terrorist attacks, and have expressed their sympathy for the victims and their families. A number of companies spoke out to affirm that, despite the huge loss estimates, global insurance and reinsurance will be able to cover the damages.
“The global insurance and reinsurance industry has the financial structure and strength to absorb a catastrophic loss such as occurred yesterday, “stated Dr. Robert Hartwig, VP and Chief Economist of The Insurance Information Institute in New York in a statement on Wednesday. “There is layer upon layer of coverage so that no single company bears the brunt of the loss alone.”
As Lloyd’s Chairman Saxon Riley pointed out, those losses “are simply unquantifiable at present.” Preliminary estimates vary so widely – Moody’s Investors Service put them at between $10 and $15 billion, while an Article in the U.K.’s Independent estimated £28 billion (over $40 billion) – that no figures can be be deemed reliable at this point.
In addition to losses covered by property/casualty insurance there will also be life insurance claims, workers compensation policies, business interruption coverage, and in all probability a number of lawsuits against employers and the Airline Companies, which must be defended or settled.
The heaviest burdens will eventually fall on the reinsurance markets, particularly Lloyd’s, Swiss Re, Munich Re and Berkshire Hathaway’s General Re, the largest U.S. reinsurer.
Munich Re indicated it expected to receive claims from aviation losses, property coverage, employer’s liability and business interruption of at least €1 billion ($900 million), but that it was “far too early” to produce any meaningful figures.
Swiss Re’s statement noted that “no financial payment can make up for any human suffering,” and reassured clients that it “carries provisions for large catastrophic events of this magnitude,even though this is one of the largest loss events possible.” While refusing to make any estimates, the company indicated that it expected the losses to be “in the range of the 1999 European winter storms.” Those eventually cost Swiss Re over half a billion dollars.
Ewald Kist, the CEO of Holland’s ING Group, and Brian Duppereault, ACE Ltd. CEO also sent messages of condolence and support. Both said they expected losses from the tragedy, but that it was too soon to give any estimates as to their amount.
Although some hope remains that a number of people who worked in the World Trade Center were able to escape before the buildings collapsed, it seems increasingly likely that the insurance industry is facing the most expensive catastrophe of all time.
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