The global insurance system has the financial strength to handle the losses from the terrorist attacks of Sept. 11, according to the Insurance Information Institute (I.I.I.).
Insurance losses from the attacks will be shared throughout the worldwide insurance and reinsurance system and not be borne by any single company. Insurance coverage on large risks such as the World Trade Center and airlines traditionally are insured by a number of insurance companies, which, in turn, share their portion of the risk with reinsurance companies, explained Dr. Robert Hartwig, I.I.I. vice president and chief economist.
“The global insurance and reinsurance industry has the financial structure and strength to absorb a catastrophic loss such as occurred yesterday,” Hartwig said. “There is layer upon layer of coverage so that no single company bears the brunt of the loss alone.”
Insured losses are likely to be in the billions of dollars, but it will be some time before an accurate assessment of the total impact can be made.
Hartwig said that it was too early to tell what impact the disaster may have on commercial property and liability insurance rates, which have been rising during the past year. “Insurance and reinsurance companies will be taking a close look at the impact of the terrorist attacks on the risks they insure,” he said.
Any determination of insured losses will take into account the property damage to the World Trade Center complex and adjacent buildings; business and personal property of tenants and their employees; workers’ compensation for injured workers; claims for lost business income; the cost of establishing alternative, temporary operations at off-site locations and damage to vehicles. Aviation policies will also be impacted.
The U.S. government is self-insured, so physical loss to government buildings is not a commercial insurance issue. Insured commercial businesses within the Pentagon, for example, could incur insured losses.
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