NEW YORK — In August 2009, a powerful earthquake halted production at one of Corning’s liquid-crystal-display glass manufacturing facilities in Shizuoka, Japan. The quake put a crimp in the company’s ability to parlay a spike in demand for LCD glass, causing it to report an estimated $65 million sales loss for the July-September quarter of that year.

Two months later, the company was hit with a power disruption at its Taichung, Taiwan facility. Speaking on a panel at a property insurance conference on Tuesday, Judy McInerny, the glassmaker’s risk manager, estimated that the company experienced about $200 million in property losses as a result of such events.

In response to those losses — and recognizing the fact that more than 50 percent of Corning’s operations are located outside the United States, mostly in quake-prone Asia — the glassmaker spent “hundreds of millions of dollars to protect [its] facilities against earthquake and electrical losses,” she said at the Advisen Property Insights Conference.

It’s a tenet of the property-casualty insurance industry that when a client company spends money on safety and loss prevention, it should get a break on property insurance premiums, the ability to buy more coverage, or both. Yet no such thing is happening, risk managers at the conference said.

“The problem for us is that [we haven’t gotten] recognition of how we spent in the aftermath” of the Japan quake, McInerny said.

Similarly, investments in construction and life safety made by Silverstein Properties, a prominent real estate firm involved in the redevelopment of New York City’s World Trade Center, have produced “a fire-safety program on steroids,” said Shari Natovitz, the firm’s vice president of risk management.

Yet like McInerny, Natovitz has found it hard to get acknowledgement from the insurance industry. In attempting to differentiate itself from similar firms, in fact, the company has produced elaborate videos illustrating how well its properties are protected against catastrophes — a strategy that to date has not yielded results, she suggested.

Both risk managers said that underwriters have been too reliant on mathematical models that tend to paint all companies in a risk-prone area with a single brush.

Since the September 11, 2001, terrorist attacks, insurers have been wary of accumulating aggregations of risk in a single geographic area, panelists noted. That has led to an approach in which they tend to look at the aggregate risk in their portfolios, rather than looking at each company individually.

Further, as a result of looking at its exposures in that collective way, the industry has pulled back on the overall amount of property it will insure — what the industry refers to as its “capacity.”

Referring specifically to contingent-business-interruption coverage, a form of property insurance that covers supply-chain risks, Gary Love, a vice president and underwriting manager at FM Global, said: “My feeling is that capacity is not keeping up with the exposure. Underwriters are worried about aggregation and they want that assurance” that losses won’t multiply exponentially in the event of a major disaster.

That wariness is especially showing up in the area of terrorism insurance, according to Natovitz. Following the Sept. 11 attacks, the property-casualty insurance industry refused to cover aggregate terrorism claims amounting to more than $40 billion. That hit the commercial real estate industry particularly hard by making it difficult for property owners to borrow money. (Loan covenants within the real estate industry often require proof of terrorism insurance.)

To cope with the potential lack of coverage, the U.S. federal government enacted the Terrorism Risk Insurance Act of 2002. The law requires property-casualty insurers to offer terrorism coverage, stipulating that losses above $100 million would be eligible for government assistance.

TRIA is set to expire in 2014, however, and although a bill has been introduced in Congress that would reauthorize the program for 10 years, insurers are preoccupied with the question of “what’s going to happen in 2014,” said Natovitz.

“We’re hearing from the industry that [it’s] not going to commit [to providing terrorism coverage] past 2014,” the risk manager said. “That creates problems for us.” 

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