Actuarial issues of attack!!!!

[Anonymous]

What Insurance Company covered the WTC against terrorist attack?

How much do you think they'll have to pay in claims?

[bongo]

10,000 highly paid professionals, average life insurance policy of $500,000 = $5B in total life insurance.

20,000 workers comp claims. average $20,000 each. $400M WC.

Business interruption?

Looks like WTC was owned by NYC and not insured?

[Anonymous]

Are losses resulting from war or acts of terrorism usually covered?

[Anonymous]

So taxpayers are going to pay the bill?!

I would have to imagine private companies housed in the WTC had insurance. It wouldn't make sense form a risk management standpoint not to. Then what about all of the financial infrastructure? Wasn't most of the stock market's infrastructure in those buildings? Those had to have been insured.

[IHope2Pass]

A couple hundred actuaries stuck in New Orleans unable to fly home. The Cheif Actuary of my company was still trying to find a rental car when I left work this afternoon. (It's about a 20 hour drive from N.O. to our company)

[Anonymous]

I heard on the news that Munich Re and Lloyds of London were the major insurers of the WTC. Of course that doesn't mean the news reporters understand the specifics of the contract and any exclusions.

[Dr T Non-Fan]

Suddenly, the disaster management program at my work seems relevant.
I'd bet that the NYSE or futures markets' (according to "Trading Places") data are backed up to a far off place every night. Possibly every minute.

[Anonymous]

I think american airlines is the one primarily liable, for their lax security that allowed on hijackers and for allowing their planes to fly flew into the buildings. I think work comp and property insurers could subrogate against them. the families of victims and victims could sue american too. this is american's liability, not WTCs. I think the aviation assumers could be floored. The ground casualties and property damage dwarf the passengers and the hull damage. am i wrong about this?

[Traci]

"""I think american airlines is the one primarily liable"""

Oh - I don't know. They'll have to take their fair share - but I don't see holding them primarily responsible. United lost 2 planes too.

The only report I heard so far of weapons involved was one of knives and knife-like weapons - which could not be TOO difficult to smuggle on. I remember traveling on business many times and not being able to pass the metal detector because of a belt or other metal accessory. They quickly hand-scanned me and let me through. I could have easily had a knife.

Also - I will never believe that any pilot was at the controls when those planes hit. They were taken over.

<font size=-1>[ This Message was edited by: Traci on 2001-09-11 19:20 ]</font>

[IHope2Pass]

Yes Yes Traci... I agree with you.
I don't think that the airline pilots are to blame at all. They were most likely not in control of the planes. It is hard to believe that the regular pilots would fly into the buildings even under duress.

Were the airlines negligent in their security? It's hard to tell, but in all news reports they said that there was no warnings or indications of anything like this happening.

[Anonymous]

On CNN's website

"Insurance claims to reach billions
The WTC attack could be the costliest
man-made disaster"

http://cnnfn.cnn.com/2001/09/11/companies/insurance/

[Anonymous]

Some P&C companies will go bankrupt from this.

And instead of more Life regs, where are the P&C regs? P&C companies are in much greater need of regulation than life companies.

[Anonymous]

Read the fine print.

What about the "war clause" (declared or undeclared)?

Everyone is saying that this is "an act of war"

[Anonymous]

The WTC is owned by the Port Authority of NY/NJ

[Anonymous]

I can't really say this is an act of war. who are we at war with? was mcveigh an act of war? It is an issue of lax security. I don't think you're supposed to take knives on planes, I don't think pilots are supposed to hand over controls, and maybe the folks who check you at the airport for security risks, the one's who have a 100% turnover rate because the airlines won't offer good pay or benefits, but instead subcontract out to the cheapest bidder, just maybe the airlines could have trained them better to detect weapons, and compensated them better to retain well trained people. I heard this security expert talking yesterday, and she said - hey! metal detectors might detect it, but it's up to the workers to be trained to see it's a threat. I say american and united got what they paid for, and they should be held accountable.

[bongo]

My intel on the WTC not being insured looks bad. It is owned by the port authority, and probably insured by somebody. From National Underwriter:

"When terrorists bombed the World Trade Center in 1993, the total insured damage for far less loss of life and property was $510 million, according to the Insurance Information Institute in New York. The insured loss from the terrorist bombing of the federal building in Oklahoma City in 1995 was $125 million."

From Washington Post:

"Just two months ago, two real estate companies, Silverstein Properties of New York and Westfield America of Los Angeles, won a bidding contest to lease the towers and their underground mall from the Port Authority for 99 years at a price of $3.25 billion. The authority had rejected earlier overtures from would-be buyers."

WTC towers cost $750M-$1,110M to build (depending on source) in 1973. CPI inflation (not counting other potential cost increases) would bring that to around $4B.

There is considerable damage to surrounding buildings as well.

Acts of war are excluded, but terrorism is normally covered like riot and arson. If we do declare war soon, I would expect to see some litigation on this issue.

I'll say $5B life & health, $6B P&C ($8B ground-up, $6B insured).

[Anonymous]

the problem is with the bleeding hearts who are so afraid that we might be mean to terrorist groups or violate the rights of these groups, that they prevent our intelligence system from doing their jobs...if you had let our intelligence systems have some room to function this would not have happened



On 2001-09-12 09:13, Anonymous wrote:
I can't really say this is an act of war. who are we at war with? was mcveigh an act of war? It is an issue of lax security. I don't think you're supposed to take knives on planes, I don't think pilots are supposed to hand over controls, and maybe the folks who check you at the airport for security risks, the one's who have a 100% turnover rate because the airlines won't offer good pay or benefits, but instead subcontract out to the cheapest bidder, just maybe the airlines could have trained them better to detect weapons, and compensated them better to retain well trained people. I heard this security expert talking yesterday, and she said - hey! metal detectors might detect it, but it's up to the workers to be trained to see it's a threat. I say american and united got what they paid for, and they should be held accountable.

[Anonymous]

There is one clear actuarial issue here, which our CAS brethren will recognize, but which we SOA types don't think about too often.

Concentration of risk. This incident may change the way we think of tall buildings and crowded business districts in the future.

On the other calculations, not only did the 2 towers come down but one of the "smaller" buildings came down (60 floors?) and the WFC is apparently on fire as well.

As for "business interruption" note that essentially the entire district has been stopped for at least a few days, and any number of the surrounding buildings will be shut down for a longer period.

Also, the estimates of building cost don't consider the value of the build-in's, computers, etc.

[Anonymous]

Yes, we need more P&C regulations.

[Anonymous]

any thoughts on airlines liab carriers paying for all this, vs property and life insurers. It was the airlines planes that caused the problem

[Rockhound]

"It was the airlines that caused the problems"

No it was not. It was the terrorists that caused the problem.

Legal liability may be something else entirely, but the ONLY ones to blame here are these terrorists.

[Anonymous]

rockhound,

I said it was the airline's planes - not the airlines- that caused the problem, but you just had to edit what I said. Do you want to tell me how the planes did not play an eseential role in yesterday's attack??

and I am talking about legal liability here, nothing else. that's what determines which insurers are hit, and that's what this is about. If I insure a store, and someone drives an insured truck through it, I think the truck insurer is ultimately responsible, not the stores property insurer. Property insurer can subrogate, if nothing else. and I wonder if people are erroneously thinking too much about property and not liability.

[Anonymous]

** $6.7 billion **

Swiss Re Expects $730M Attack Coverage

ZURICH, Switzerland (AP) - Switzerland's reinsurance giant Swiss Re said Wednesday that it expects to cover $730 million in losses from terrorist attacks in the United States.

``Based on a first and very rough estimation, the loss to Swiss Re from this event is expected to be in the range of the 1999 European winter storms, Lothar and Martin, but further information will affect this indication,'' said a company statement.

Company spokesman Johann Thinnhof, who said initially that the cost would be ``about 1 billion,'' said later the more precise estimate for Swiss Re's exposure ``should be 1.2 billion Swiss francs.''

The December 1999 storms wreaked havoc in France and elsewhere in western Europe, costing insurers overall some $6.7 billion.

The overall insurance cost of the U.S. attacks, of which Swiss Re will have only a portion, is still to be determined, the statement said.

``Given its unprecedented nature and complexity, it will take some time to provide accurate information about the full extent of this event,'' said the statement.

It said the company carries provisions for ``large catastrophic events of this magnitude.''

``Even though this is one of the largest loss events possible, Swiss Re's financial strength is not in doubt and the fundamentals of the company will not change.''

Swiss Re is one of the world's largest re-insurers, meaning it insures insurance companies against major losses.

The statement said the company was ``deeply moved by yesterday's tragic events in the United States.''

``Swiss Re people have long-standing and often personal relationships with the financial and insurance community across the United States and particularly in New York,'' it said. ``Our thoughts are with them at this time.''

[Anonymous]

portion of a statement by Munich Re:

In response to many enquiries, Munich Re has stated that in view of the complexity of the events it is naturally too early to know and communicate details of the insurance covers and the related reinsurance protection. The loss events, after all, involved one of the biggest catastrophes ever caused by man.

One of the central functions of insurers and their reinsurers is to partially or fully shoulder the financial burdens of those affected by such losses. Thus, as announced yesterday, the world’s leading reinsurer, Munich Re, will assume substantial claims costs, which may extend into the region of €1bn and will derive mainly from the lines of aviation, buildings, business interruption, life, and workers’ compensation insurance. These losses will significantly impact the projected development of the net profit in the current business year 2001 but will not affect the solidity of the Munich Re Group, which is sufficiently prepared even for loss events of this size. By way of comparison, Munich Re points out that it had to bear similar claims burdens for the 1990 winter storms, for Hurricane Andrew in 1992 and for the storms in December 1999 in Europe. Munich Re’s largest loss ever in relation to its portfolio was the 1906 earthquake in San Francisco.

[Anonymous]

it's possible the airlines are liable, after all:

from yahoo news:
Reuters) - Insurers could be pushed to the limit by billions of dollars in claims from Tuesday's attacks on the United States, while airlines could face potentially crippling liability costs, experts said on Thursday.

The insurance industry is trying to assess the cost of damage from the hijacked aircraft that demolished New York's World Trade Center and slammed into the Pentagon (news - web sites) on Tuesday, possibly killing thousands of people.

But there is confusion over who will foot the bill.

Experts said the unprecedented nature of the attacks raised questions about liability -- whether the buck should stop with the airlines or airports, airport security firms or the U.S. government.

It is not clear whether United Airlines and American Airlines could be liable for the havoc caused by the collisions.

``Are the aviators responsible through their liability policies for the building damage?'' said Robert Hiscox, chairman of Lloyd's of London underwriter Hiscox Plc.

``Nothing is clear,'' he added. ``There is no legal precedent for how it's paid.''

The view is it will end up in the courts and possibly take years to untangle the complex web of insurance claims.

[Anonymous]

I've done some looking for our, smaller, mult-line company. We're probably typical.
Total direct losses might be 25-50% of this year's before tax profit.

We've got catastrophic coverage that kicks in at about 5% (that's an awfully conservative policy, but I didn't make it).

[Intents]

http://abcnews.go.com/wire/US/ap20020618_2251.html