I was 23 when the horrible events of 9/11 happened. I thought about all of the losses of life and the devastation that the United States endured but never did the insurance effects cross my mind. It would be 7 years until I enter the insurance world. Now when I think of events and devastation insurance is usually not far from my mind.
When terrorists attacked New York’s World Trade Center on 9/11/01 it was the largest single insurance loss in history, resulting in an estimated $40.2 billion in insured damages and shaking the insurance industry worldwide. The events of that day have prompted insurers to introduce terrorism insurance as a necessity, assess underwriting risk more accurately with the use of catastrophe (CAT) modeling, enhance efforts in business continuity and document management and to collaborate with the federal government on 14 major pieces of legislation, including the Terrorist Risk Insurance Act of 2002.
Before 9/11 insurance carriers neither charged for nor specifically excluded terrorism coverage. After 9/11 most states insurance regulators approved terrorism exclusions for insurance carriers. Congress responded by enacting TRIA in November 2002 to provide a government reinsurance backstop in case of large-scale terrorist attacks, requiring that business insurers offer terrorism coverage for types of insurance included in the act. Congress extended and amended TRIA in December 2005 and December 2007. TRIA is currently set to expire on December 31, 2014.
The events of 9/11 was absolutely unprecedented in every single respect, producing the largest property losses ever, the largest workers compensation losses ever, the largest aviation losses in history. It sent shockwaves through the global insurance industry around the world. Insurance is a global business and some 200 insurers wound up sharing in the losses associated with the 9/11 attack.
$11 billion (27 percent) in claims for business interruption; * $10 billion (25 percent) in liability claims; * $6 billion (15 percent) in property claims for damage to property, including vehicles, other than World Trade Center buildings One and Two; * $3.5 billion (9 percent) in property claims for WTC buildings One and Two; * $3.5 billion (9 percent) for aviation liability; * $2.7 billion (7 percent) in life insurance claims; * $2 billion (5 percent) for workers compensation claims; * $1 billion (2 percent) in claims for event cancellation and * $500 million (1 percent) in hull claims for the loss of the four commercial aircraft.
While I was looking up information to write this blog I found information from Vice Chairman of Chubb Corporation. Chubb is a global property-casualty that has provided business and personal insurance for over 120 years. This information came from National Commission On Terrorist Attack Upon The United States.