October 3, 2001 by Canadian Underwriter
Rating agency Fitch’s is predicting Lloyd’s of London losses from the terrorist attacks on America could reach US$10 billion or more. This comes after Lloyd’s announced estimated gross losses of US$1.9 billion for the market – still representing the single biggest loss event in Lloyd’s 300-year history.
Fitch’s makes the claims based on the industry’s experience following the Northridge earthquake in 1994, where loss estimates of US$2.5 billion quickly grew to US$12.5 billion.
Loss estimates are generally too low, the rating agency notes. Gross losses tend to be three to four times higher than net estimates.
The bulk of the loss will be felt by Lloyd’s reinsurers, and insolvency of some Lloyd’s members can not be ruled out, Fitch’s goes on to say.