For those who lived through major tragic events in the nation’s history — Pearl Harbor, the death of President Franklin Roosevelt, John F. Kennedy’s assassination — the first thought that often comes to mind is where they were as the events unfolded.

And so it was for Americans who bore witness to the seminal event of the past decade: the terrorist attacks of Sept. 11, 2001.

Among life insurance executives interviewed by LifeHealthPro in the run up to this 15th anniversary of the 9/11 attacks, the high drama of that day left deep and lasting marks, both personally and professionally.

The thousands of lives lost that clear September morning gave their life’s work — protecting the uninsured and the underinsured — a renewed sense of purpose. Significantly, the war on terror following the attacks also prompted changes at the carriers, including an industry-wide reassessment of the insurers’ ability to withstand subsequent, 9/11-like attacks.

Like a bolt out of the blue

The events that forced these developments — passenger jets that crashed into the World Trade Center’s north and south towers and, later, the Pentagon and a field in Pennsylvania — halted all business at insurers around the country. After absorbing the initial shock, carrier executive set in motion urgent procedures to attend to their people, assets and, not least, their policyholders.

Related: Life insurance regulators look back on 9/11 after 15 years

“We had TV monitors in all of our elevator banks and people were glued to them,” says Patrick Foley, president of individual life and financial services at OneAmerica. “We immediately began checking on traveling employees to be sure they were okay. Because of the prospect of follow-up attacks, everyone was in a mad dash to get home.”

But not in the air. Because the government had grounded planes after the attacks, insurance executives traveling on business were forced to make their way home by car, bus or rail — and sometimes with a bit of stealth.

Christopher Carlson, national vice chairman for strategic businesses at Ohio National, says that company execs then in New York City were “less than forthcoming” with an agent of car rental business about plans to drive a rental vehicle from NYC to the insurer’s home offices in Cincinnati. The reason: travel restrictions the rental company had imposed on the use of its cars.

Such inconveniences aside, carrier execs say their employees and family members were fortunate in that none were in the vicinity of the twin towers during the attacks.

Though physically unscathed many, however, experienced anguish and anxiety in the days following, often after reconnecting with friends or business colleagues who were personally affected.

Related: For health insurers, 9/11 started small but might have a long tail

9/11 remembered

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Responding to the tragedy

Carlson recalls a conversation with a New York City-based Merrill Lynch executive who saw employees jumping off one of the tower’s top floors — and hurtling to their deaths more than a thousand feet below — to avoid being consumed by fires engulfing the building.

“I was struck by how he had been scarred for life watching these events,” says Carlson. “Listening to personal stories like these … They always stay with you.”

Related: One advisor lost 51 clients, then delivered 30 checks after 9/11

Executives also vividly remember events underway at their corporate offices: Call centers turned into veritable war rooms as agents and service representatives fielded calls from anxious customers. Many connected to inquire about the safety of their policies and plan assets. Other callers sought information about missing family members, friends or business associates.

That was the case at Minnesota Life, a Securian Financial unit that went on high alert after the attacks to brace for an influx of calls. The insurer designated one staffer to handle 9/11-related inquiries; others managed the inevitable death claims.

Gregg Hammerly, a second vice president of claims and 33-year veteran at Securian, says the insurer processed more than 30 claims and distributed over $5 million in death benefits to beneficiaries of 9/11 victims. Payouts were about evenly distributed across the company’s book of business, including both individual and group life insurance policies. Claims also were made on products offered through Securian’s Financial Institutions unit, including mortgage accidental death insurance, mortgage life insurance and mortgage disability insurance.

In total, says Hammerly, the policy tally jibed with Securian’s estimate of death claims calculated in the wake of the attacks.

“At the end of the assessment, claims fell into the range of our projections,” said Hammerly. “The estimates were spot-on.”

That may have proved gratifying to top execs keeping an eye on the bottom line. But for customer service representatives processing claims, the personal interactions with policy beneficiaries brought their own rewards. Hammerly recalls staffers who received at Christmas time “thank you” cards from survivors of 9/11 victims.

“That they would take the time to reach out to us after everything they had been through was really touching,” he says. “As a result of the attacks, we saw the worst of the world, but also had many positive experiences in the way people were handling the tragedy.”

Related: What the annuity industry can learn from 9/11

remembering 9/11

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Planning for the next one

Within insurers’ C-suites, the attacks also prompted reviews of their ability to financially withstand another catastrophe (man-made or otherwise) and make good on policy claims. The risk assessments were particularly critical for multiline insurers with exposure to losses not only through their life insurance book of business, but also property and casualty lines.

“Whenever you’re doing long-term risk scenarios, you consider potential ‘Black Swan’ events,” says OneAmerica’s Foley. “But after 9/11, the financial consequences of natural or unnatural disaster became much more prominent in our long-term planning. These types of events were taken very seriously.”

Related: For Every Life, a Story

Another terrorist attack like 9/11 would be costly, indeed. In a 2004 report, the Rand Institute for Civil Justice pegged compensation paid to 9/11 victims at $38.1 billion ($43 billion in 2015 dollars). Of the total, estimated insured losses accounted for the lion’s share: $32.5 billion or more than 30 times greater than the next largest insured loss resulting from a terrorist attack, the $907 million paid to policyholders following a bomb attack in London in April 1993.

Payouts on life insurance policies after 9/11 were, however, comparatively small. The Insurance Information Institute tabulated payments and claims adjustment expenses for group and individual life insurance policies totaling $1 billion or an average of $350,000 per deceased civilian.

Why were the proceeds not larger? Rand cites (not surprisingly) a lack of insurance coverage.

“… Few of those who died in the September 11 attacks carried life insurance that was substantial relative to lost lifetime earnings,” the report states. “Even high-wage earners with spouses and dependents typically carried life insurance that was not substantial relative to lost lifetime earnings, whether the insurance was purchased directly or through employers.

“It was consistently reported to us from both insurers and representatives of insureds that life insurance benefits were paid promptly and in full,” the report adds. “In fact, a number of the firms affected by 9/11 reported that corporate insurance carriers paid out on multiple lines of coverage, including lines for which the insureds were not strictly eligible.”

In some cases, however, insurers withheld death benefits because they detected foul play. Case in point: Minnesota Life, which suspected fraud in one of two policy claims after the contract beneficiary claimed (falsely) that his wife had died after reporting for an interview at the investment banking firm Cantor Fitzgerald, which lost most of its employees in the twin tower attacks.

Were it not for an alert examiner, who questioned the legitimacy of the claim after judging the husband’s paperwork “incomplete” and his answers to questions “vague,” Minnesota Life would have paid $400,000 in death benefits. A half-dozen insurers defrauded by the Georgia couple were not so lucky: They collectively distributed $273,000 on more than $600,000 in benefits before the couple was charged.

“Disasters that result in a major loss of life can be opportunities for people to consider doing something inappropriate,” says Securian Financial’s Hammerly. “That unfortunately happened in this case. Since 9/11, our special investigations unit has taken advantage of improved fraud detection tools and techniques, including additional resources available on the Internet.”

Related: Unhealthy Skepticism

remembering 9/11

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Protecting HQ and policyholders

The events of 9/11 led to other changes. Among them: upgrades to corporate security; and new living benefit riders for policyholders. San Antonio-based USSA, which serves more than 11 million active and retired military service members, has been particularly active on both fronts.

In the months following the 9/11 attacks, the insurer heightened security around its headquarters: the corporate campus is now fully gated; only employees and visitors with official badges are permitted entry.

 Related: On the Third Hand: World Trade Center

Greg Riedel, an assistant vice president and life insurance product line leader at USAA, says the securities measures were needed to “protect members’ information.” Enhanced protections extended as well to the policies USAA offers its service members.

Since 2005, active military service members have been able to buy an additional term policy to replace the Servicemembers Group Life Insurance coverage they lose upon leaving the military. Up to $400,000 in coverage can be purchased without the need for medical underwriting.

USAA now also avails active military of policy riders offering up to $25,000 if they should suffer a severe injury in the line of duty; expedited application processing in the event of deployment; and coverage in the event that death is caused by war.

“After President Bush deployed our troops overseas following the 9/11 attacks, we introduced these policy benefits to align with our members’ needs at the time,” says Riedel. “We wanted to be able to react in a quick and timely fashion, expedite processes and ensure they had adequate coverage in place should they deploy.”

Among those deployed were USAA staffers — military reservists sent to Afghanistan and Iraq in the wake of the 9/11 attacks. The military culture at the insurer runs deep: About 30 percent of the insurer’s employees are retired or reserve duty military members.

As part of their benefits package, the employees enjoy access to free counseling services. After 9/11, says Riedel, these offerings proved of much of value to reservists concerned about the toll, both financial and emotional, their overseas deployments might take.

Closer to home, the 9/11 attacks took their own toll. Riedel recounts how his father and uncle, both fire chiefs, were deeply saddened by the deaths of first responders — police officers, firefighters, paramedics and emergency medical technicians — whose lives were cut short on 9/11.

“The attacks of September 11 were extremely difficult for our family,” says Riedel. “To this day, 9/11 holds a special place in our hearts. We annually attend memorial services dedicated to those who lost their lives.

“The fact that I found my way to USAA 6 years ago and now have an opportunity to serve those who defend our country — people who were deeply impacted by the attacks — means a lot to me,” he adds. 

Related: Ratings Analysts Narrow 9-11 Losses To About $3 Billion For L&H Industry