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October 28, 2001 at 07:00 PM
Only the most dedicated critics could find something to carp about in the insurance industry’s response to the terrorist attacks on Sept. 11. In the face of staggering claims, both the property- casualty and life insurance businesses have reacted admirably and with alacrity.
Projected tabs for the disaster run to about $50 billion for the p-c industry and around $5 billion for the life segment. This is not mere pocket change, by anyone’s reckoning.
It doesn’t take too much imagination to see that a few more situations that created equivalent financial havoc would cause a grave threat to the stability of the industry.
While it is true that insurance is taken out as a guarantee against the unforeseen, it is also true that some unforeseen situations are more unforeseen than others (with apologies to G. Orwell).
In their wildest nightmares, very few in this country could have imagined the devastation of Sept. 11 and that what started as a sunny late summer day with the Twin Towers standing proudly would only a couple of hours later find them collapsed, with much of lower Manhattan looking like a war zone.
The property-casualty industry has been engaged in negotiations with the government to have the United States become involved as the insurer of last resort in the event more attacks occur.
First there was talk of a reinsurance pool. But this proposal proved to be so cumbersome that it caved in under its own weight.
Now the Bush administration has come forward with a plan that would cap the p-c industry’s financial losses over the next three years in the eventuality of further terrrorist attacks.
