How will insurers deal with terrorism in the future?
The terrorist attacks of September 11 will undoubtedly alter how insurance companies evaluate and underwrite risk in the future. Looking forward, it is nearly impossible to determine the magnitude of terrorism risk that may lie ahead, and with what frequency it may occur. Additionally, there is no credible amount of historical loss data to effectively estimate future loss that may result from an increased level of terrorism. While the insurance industry will be able to fund losses from the destruction of the WTC, the industry’s capital base may not be able to withstand repeated future losses. Consequently, many companies are taking measures to protect themselves from future losses. For example, American International Group, Chubb Corp., and General Re have held discussions with U.S. legislators to request government assistance in covering claims for any future attacks. According to Chubb, it has become increasingly difficult for primary insurers to find reinsurers willing to cover terr
