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Life Health > Life Insurance

RMS: Many Disasters Could Cost More Than 911

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NU Online News Service, April 29, 2004, 1:55 p.m. EDT – Many easy-to-imagine disasters could end up causing more insured life and health losses than the Sept. 11, 2001, terrorist attacks.[@@]

Researchers at Risk Management Solutions Inc., Newark, Calif., come to that conclusion in a report that assesses the effects of 7 grim scenarios on losses at health, individual life, group life, workers’ comp and accidental death and dismemberment carriers.

The scenarios examined include a magnitude 7.1 earthquake in Los Angeles, a magnitude 6.0 earthquake in Chicago, a terrorist attack using 3 simultaneous truck bombs, a midsize anthrax attack, a big anthrax attack, an industrial rail accident and chemical spill, and a serious nationwide flu pandemic.

Insured loss estimates range from $2 billion for the Chicago earthquake to $54 billion for the big anthrax attack, and forecasts for loss of life range from 2,100 for the Chicago earthquake to 200,000 for the flu pandemic.

For life insurers, a big anthrax attack might cause the most damages, but a serious flu pandemic might cause the most damage for health insurers, the RMS researchers predict.

The number of deaths, the severity of the survivors’ injuries, the nature of the victims’ insurance coverage and the time of day an event occurs all affect loss estimates, according to RMS researchers.

When the RMS researchers looked at the effects of a serious flu epidemic, they estimated that 30% of the victims would have little or no private insurance coverage.

But the victims who did have coverage might cost group life insurers $2.6 billion, individual life insurers $6.4 billion and health insurers $30.5 billion, the researchers predict.

Experts estimate that the 9/11 attacks led to less than $10 billion in insured life and health losses.

The RMS researchers note that the flu pandemic used in their scenario would be more severe than the 1968 Hong Kong flu pandemic but only about 10% as deadly as the flu pandemic that struck in 1918.


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