September 17, 2001 by Canadian Underwriter
Financial rating agency A.M. Best Co. expects that insured losses arising from the World Trade Center (WTC) terrorist attacks will exceed US$30 billion. A.M. Best calculated the potential cost based on discussions with several of the major insurers and reinsurers with high exposures in the various business lines affected by the tragic events which took place on September 11.
Despite the magnitude of the potential insured losses, the rating agency believes that the property and casualty insurance industry’s financial strength will not be impaired. "The nature and location of the tragedy dictate that the majority of the losses will ultimately fall on the largest commercial carriers, their reinsurers and the London market."
A.M. Best notes that the business segments of the insurance industry most likely to be impacted by events include property, aviation, business interruption, workers’ compensation, commercial liability and life insurance. A number of currently unknown factors will influence the ultimate insured loss resulting from the WTC events, the rating agency adds, with legal definitions of whether this was a single event or multiple events likely to play a critical role. Another issue is whether there are any exclusions of acts of terrorism written into major covers, A.M. Best observes.