New York Attack Caused Record Losses for Property Insurers

December 21, 2001

Initial Swiss Re estimates say that 2001 was a very costly year for property insurers.

In a PRNewswire report, man-made and natural catastrophes claimed more than 33,000 lives worldwide in 2001, with the direct financial loss from major events expected to be more than $115 billion, of which more than $32 billion will be borne by the insurance industry. The insured property and business interruption losses alone caused by the terrorist attacks of Sept. 11 are thought to be $19 billion. Those figures do not include the indirect negative impact on the equity markets and the global economy.

The attack in September, with a forecasted $90 billion damage, registered the greatest economic loss by far, but billion-dollar losses this year were also results of the Code Red computer worm and the explosion of a drilling platform off the coast of Brazil. When looking at the natural catastrophes, Allison in the U.S., which impacted a number of southern and eastern states, and earthquakes in India, El Salvador and the U.S. resulted in economic losses that ran into the billions.

The trend towards higher losses continues given the risk factors of higher population densities, and greater concentrations of insured values, specifically in endangered areas.

Following the large losses incurred in 2001, the risk of terrorism is increasingly being factored into the equation.

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