A think tank for the worldwide insurance industry says that claims from September 11 have pushed the sector to the limit.This content was published on September 11, 2002 - 11:56
However, the Geneva Association reports that the industry will be able to cover payouts resulting from the attacks.
The Geneva-based body, a non-profit organisation counting up to 80 chief executives from the world's most important insurance companies, estimates that the bill for the industry will be SFr60-75 billion ($40-50 billion).
At a news conference on Tuesday, the Geneva Association said September 11 was a "global event", since more than half the payouts would come from non-American companies and the international reinsurance industry.
It highlighted the fact that many lines of business had suffered at the same time, including aviation, property, life, health, liability and business interruption.
"Besides paying 40-50 billion dollars for a risk that they never thought they had taken on to their books ... the industry has had to struggle with the stock market failure in the aftermath," Patrick Liedtke, the organisation's secretary general, told swissinfo.
"While one and the other are not immediately linked, it deals a double blow to the industry which is hard to stomach."
Weather the storm
The Geneva Association commented that it was "remarkable" that the industry could weather the situation when not a single dollar had been set aside specifically for such an event.
It added that one of the lessons to be learned was that man-made catastrophes could easily become as expensive as natural catastrophes.
Hurricane Andrew, the second most costly insured event, landed the industry with bills of about $20 billion.
Another lesson was that terrorism risks could be insured if there was private-public cooperation.
Governments and insurance
"We have to deal with a risk that has been assumed to be basically uninsurable and we are now reaching a level of understanding where we can find that by cooperating - governments and insurance at the same time - we can solve this problem ... but it takes time," said Liedtke.
"The ideas are somehow to limit the exposure of insurance companies, to create some sort of government backstops to allow them, for example, to exclude terrorism risk from certain classes of policies."
The Geneva Association said that among the challenges facing the insurance industry were improving risk management and solving the terrorism "uninsurability" problem.
In view of the stock market collapse, the industry should abandon the practice of compensating aggressive underwriting through high investment returns, it added.
swissinfo, Robert Brookes
Insurance and September 11
September 11 was the most expensive insured event.
Claims resulting from September 11 could top SFr$75 billion.
Insurers have now cut exposure to acts of terrorism.
Companies have also been hammered by tumbling stock markets.
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