Risk Management

Terror Attacks Could Result in $70 Billion Insurance Tab, Analyst Says

Hartford Financial reports $440 million loss resulting from events of Sept. 11.
CFO.com StaffOctober 16, 2001

A leading insurance industry analyst says that the insurance bill from the September 11 attacks could be as high $70 billion, according to Reuters.

The most realistic cost range of insured losses is now between $30 billion and $70 billion, Mark Hewlett, managing director of Moody’s European Insurance Research. Earlier estimates for all lines put the top loss figure within the range of $30 billion to $58 billion.

Hewlett told Reuters, however, that where the figure is within his predicted range “is anyone’s guess at the moment…The market is now accepting that it’s $30 billion plus.”

He said it could be years before the final figure emerged.

Insurance industry executives say recent upward revisions of losses reflect unexpected claims coming in as more damage was uncovered in the area around the World Trade Center, according to the news service.

Firms have not yet had claims for business interruption and liability, which could take years to settle, the sources said.

In the most recent report by an insurer of the effects of Sept. 11 on its financial statements, Hartford Financial Services Group said on Tuesday it will take a loss of $440 million in the third quarter as a result of having to pay claims arising from the destruction of the World Trade Center. The property-casualty and life carrier predicted an operating loss in the quarter, according to Reuters.

The $440 million loss is slightly below the $450 million maximum forecast by Hartford last month. It includes $420 million from its property and casualty operations and $20 million related to Hartford Life. The amount is after tax and includes the effect of reinsurance coverage bought by the Hartford.

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