September 27, 2001 by Canadian Underwriter
Chubb CEO Dean O’Hare was among insurance representatives speaking to Congress this week on the need for an insurance pool to cover terrorism risks moving into the future. In light of the recent terrorist attacks on the World Trade Center and the Pentagon, insurers fear a withdrawal of reinsurance coverage could make it impossible for them to cover such risks.
“Unfortunately, it is becoming apparent that as current reinsurance agreements expire, they will be renewed only with a terrorism exclusion, and therefore it will be impossible to provide our customers with terrorism coverage,” O’Hare says.
However, he was also quick to note that insurers are prepared to pay claims from the September 11 tragedy and that the industry can sustain the losses incurred. But moving ahead, he questions how the industry’s solvency will hold up against such catastrophes in the future.
National Association of Insurance Commissioners (NAIC) president Kathleen Sebelius also told Congress that the industry can withstand the losses suffered, and explained to the House Financial Services Committee that the NAIC will be acting to ensure the industry’s overall stability.
She notes that the group is currently looking at 50 U.S. insurance groups, comprising 275 companies, as well as 30 global reinsurance groups, 35 individual reinsurers and 90 Lloyd’s syndicates. As well the NAIC will be looking at the legal issues raised by the events of September 11.
She gave support for an insurance pool, such as has been set up in the U.K., noting, “We know the insurance industry cannot withstand multiple events of this magnitude without harm to all consumers. For this reason, we encourage Congress to look at proposals so that risk of loss from terrorist activities in the future can be spread as broadly as possible.”
In related news, Gerling Global has revised it loss estimates from the terrorist attacks, upping the figure to US$200-250 million. Canada’s London Life estimates claims to its reinsurance rations will result in a Cdn$82 million loss.