Representatives of the insurance industry testified Wednesday before the California Assembly Insurance Committee concerning insurance and reinsurance after the attack on America.
They noted that the Sept. 11 attack was unique in several ways: it was the largest insured loss from a man-made disaster and it deeply impacted all lines of coverage, including property and casualty, workers’ compensation and life insurance.
“Despite personal losses, the insurance industry responded immediately to the attack by dispatching hundreds of personnel to Ground Zero,” noted Diane Colborn, vice president of legislative and regulatory affairs for the Personal Insurance Federation of California. “Insurers were processing and paying claims on day one and will continue to assist policyholders as long as necessary from their catastrophe vans in Battery Park,” Colborn added.
“Insurers are processing more than 19,000 claims so far,” Colborn continued. “The number of claims is growing daily and it is estimated that the total insured losses could reach a staggering $30 to $70 billion. Insurance is playing a vital part in rebuilding America. Quick action by the industry enabled the New York Stock Exchange and several major traders to relocate and reopen for business in just five days. The industry worked collaboratively to communicate with policyholders and the public. Within days a web site and customer hotline was opened to inform policyholders how to get help,” she explained.
“Insurers in California are prepared to respond if any major event occurs on the West Coast,” said Colborn. “We have a plan in place to respond immediately to anything from a major earthquake to a terrorist attack.
When a catastrophe occurs, insurers will coordinate with all local, state and federal agencies throughout California.”
“The attack on September 11 was unique because it impacted all lines of insurance including property and liability insurance, health, life and workers’ compensation,” said Janine Gibford, legislative advocate for Association of California Insurance Companies. “This event is the largest disaster in history for life and workers’ compensation insurers. Fortunately the risk associated with this disaster was spread across all lines and several companies and no one entity took the brunt of the losses. The industry is well capitalized and will be able to quickly and fully meet the needs of policyholders,” she added.
“Insurance companies are playing a major role in paying claims and providing resources to help individuals, families and businesses recover from this horrific disaster,” Gibford noted. “No insurance company has invoked exclusions for war or acts of terrorism. The financial questions facing the industry are about future claims, not claims resulting from September 11.”
Mark Webb, American Insurance Association state affairs vice president, noted that as the country moves forward, there must be a plan in place for future terrorist attacks.
“Reinsurers and primary insurers are no longer able to offer coverage for terrorism. Businesses in Visalia and Chicago are all potentially at risk for terrorism. Insurers cannot absorb this infinite risk with their finite resources. The industry cannot accurately predict loss, plan reserves or price their product. It is vital that Congress enact a federal mechanism to restore predictability and give insurers the tools necessary to return to the terrorism insurance market.”
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