Lloyd’s Comments on Effects of Sept. 11 Attacks, May Revise Claims Estimates

Lloyd’s Chairman Sax Riley told delegates at the Association of Risk Managers and Insurance Managers of Australasia conference in Canberra that the Sept. 11 attacks mean a return to “insurance basics,” starting with a thorough examination of their clients’ corporate balance sheets.

“The impact of September 11 means it’s back to the balance sheet for buyers of insurance,” Riley indicated. “While the increase in the price of insurance is widely recognised, what’s not so well understood is that less insurance may well be available. Businesses need to conduct a full analysis of risks that could have a material impact on their balance sheets and obtain cover for those first. Then any additional cover can be purchased later if capacity permits and if prices make it economic.”

Riley listed some of Lloyd’s conclusions about the 2002 insurance market triggered by the attacks. It’s expected that:

– The cost of reinsurance will increase as major reinsurers pay claims relating to the attacks
– The amount of reinsurance available will diminish
-Underwriters will need to rebalance their risks in the light of changes to reinsurance
– Changes to, available coverage should be expected
– Insurers need to deal with increased risk profiles for many countries, particularly the US
– Insurers need to replenish their claims paying ability

Foremost among that last group is Lloyd’s itself. It’s current estimated net losses from Sept. 11 are around $1.9 billion, but many analysts are expecting an announcement this week that that figure will be raised, as Lloyd’s has just completed its latest survey of its syndicates liability estimates. Lloyd’s spokesman Adrian Beeby confirmed that the results of the survey would be announced on Tuesday.

Lloyd’s did get some welcome news as well, however. The U.S.

Attorney’s Office in New York has completed its investigation into certain activities related to documents provided to U.S. “Names”, and concluded that there was no evidence of fraud, and that no charges will be filed.

It also completed an investigation into the payment of $400,000 to the California Insurance Department in 1996, when it was headed by Chuck Quackenbush. The payment, made through Lloyd’s attorneys, had raised questions that it might have been related to the discredited Commissioner’s fund raising activities, but Lloyd’s announced that the USOA “has terminated all proceedings without any charges having been brought.”|”lloyd’s, comments, on, effects, of, sept., 11, attacks,, may, revise, claims, estimates