As rescue efforts continue in lower Manhattan, Washington, D.C., and Pennsylvania, catastrophe teams from property/casualty insurance companies are poised to enter the damaged areas to begin assessing the damage and paying claims as soon as civil authorities and law enforcement agencies allow such access.
It is still too early to accurately project the total losses from the terrorist attacks. However, it is certain that insured losses will far exceed those of any previous man-made disaster in the U.S. and may rival those of some of the largest natural disasters in American history.
The 10 most expensive natural disasters in the United States are:
1. Hurricane Andrew (8/92) — $15.5 billion in insured losses
2. Northridge Earthquake (1/94) — $15.3 billion in insured losses
3. Hurricane Hugo (9/89) — $4.2 billion in insured losses
4. Hurricane George (9/98) — $2.5 billion in insured losses
5. Hurricane Opal (10/95) — $2.1 billion in insured losses
6. Hurricane Floyd (9/00) — $1.8 billion in insured losses
7. Pacific Northwest Storms/Floods (3/95) — $1.8 billion in insured losses
8. Hurricane Fran (9/96) — $1.6 billion in insured lossses
9. Hurricane Iniki (9/92) — $1.6 billion in insured losses
10. Northern California Firestorm (10/91) — $1.6 billion
The three most expensive man-made disasters in the United States are:
1. Los Angeles Riots (1992) — $775 million
2. World Trade Center Bombing (1993) — $510 million
3. Oklahoma City Bombing (1995) — $125 million
Property damage alone from yesterday’s devastating attacks is likely to total more than $1 billion. Other insured losses for workers’ compensation, business interruption, commercial liability, automobile and other covered claims will drive the total cost significantly higher.
This horrific tragedy poses unique challenges in coordinating claims adjusting and damage assessment efforts of insurance companies with federal and state disaster authorities. As they wait for access to the properties damaged in the attacks, insurers are actively working to set up telephone and Internet networks to take claims from policyholders who may have suffered losses.
In addition, insurers’ catastrophe teams are meeting with representatives of the Federal Emergency Management Administration (FEMA), state disaster agencies and state insurance regulators to set up on-site communications near the site of the disaster when authorities conclude that it is safe for claims adjusters to enter the area. Finally, insurance companies are arranging arbitration and mediation networks to resolve disputed claims quickly without unnecessary litigation. Consumers who suffered injuries or property damage as a result of the terrorist attack are advised to contact their insurance company or agent directly.
While such catastrophic losses will likely have a significant impact on insurers and reinsurers around the world, it is not likely that any individual insurance company’s solvency will be threatened. The industry, as a whole, will be able to meet its financial obligations. In large part, this was because insurers had set aside adequate reserves to pay for such unforeseen disasters. At this point it is impossible to predict the impact that these losses will have on global insurance rates in the future.
Naturally, insurance coverage will be determined by the specific language in each policy. Some policies may exclude coverage for specific exposures, such as acts of terrorism and/or acts of war. Policyholders are urged to check the language in their policies and to contact their agent or insurer for answers to their specific questions.
For more information about the impact of the terrorist attacks on the insurance industry and how companies are preparing to serve their customers in the wake of such a disaster, please contact Joe Annotti, assistant vice president — public affairs, National Association of Independent Insurers, 847.297.7800, ext. 206, firstname.lastname@example.org.
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