Last month Aon said it was expanding the underwriting of its spin-off, Combined Specialty Corp., to include reinsurance policies as well as direct P/C insurance. In September, MMC announced it was forming AXIS Specialty Ltd., an insurance and reinsurance company likely to be capitalized at $1 billion.

Outside the insurance-brokerage world, Arch Capital, a Bermuda-based financial services firm, formed a reinsurer that also had about $1 billion invested. Two private-equity firms, Warburg Pincus and Hellman & Friedman, are together plunking down about $750 million for the effort.

Rich Uncle in the Business
Of course, this rush of new risk funding won't help those on the hook for huge losses from the attacks. For that, there's the U.S. government.

Under a Senate Banking Committee proposal — a proposal reportedly backed by the Bush Administration — insurers would be on the hook for the first $10 billion a year in terrorism-related damages for two years, with the federal government picking up 90 percent above that amount. Some underwriters gripe that the industry can't afford a $10 billion hit. Still, the government plan would create predictability. And with predictability, insurers will find it easier to write new business.

In fact, if all goes well, American Re's Noonan predicts the current chaos may start to resemble a typical shakeout in the insurance business. "Unless," he warns, "there's another event."

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