"This clearly is going to shake out to be the most expensive man-made disaster in U.S. history," said Sean McManamy, a spokesman for the American Insurance Association, a
Total claims are expected to surpass the $3 billion that insurers paid out for the Piper Alpha oil platform explosion off the coast of Britain in 1988, the most expensive man-made disaster to date.
Domestically, the cost also should surpass the 1992 riots in
The types of insurers to be affected include commercial and personal property-casualty insurers, as well as life, health and auto insurers.
But reinsurance firms, which often cover losses over an agreed amount to protect an insurer from a single massive claim, are especially likely to be hit. "It's staggering," said McManamy.
The collapsed twin towers were valued at $1.2 billion this spring. Insurers also face claims from damage to surrounding buildings, plus the costs of relocating businesses and claims against life, health and auto insurance.
The airlines that owned the planes may also file liability claims against insurers. Most of that insurance is handled by firms in London.
In the hours after the disaster, industry analysts said it was impossible to pinpoint which companies would be hurt the worst.
"However, this event will have far-reaching implications for the insurance and reinsurance industries, and could result in billions of dollars worth of insured damages," said Peter C. Streit, associate director of investment bank UBS Warburg.
One saving grace for the industry, observers say, is that the risk on such large properties generally is spread among the primary insurer and a group of reinsurers.
Across the industry, "certainly a number of companies will be severely hurt by this, but I would be surprised, at least in the property-casualty world, if this would actually take a carrier down," said Stephan Petersen, an analyst with Cochran, Caronia Securities, a small Chicago-based investment bank specializing in insurance.
Also, a number of reinsurance firms are "strongly capitalized and have conservative balance sheets," said Travis Pascavis, a stock analyst with
Still there will be pain, which could start showing up in third-quarter earnings reports, he said.
Locally, some insurance powerhouses were starting to grapple with the damage.
Most immediately affected was
The company was still trying to account for its employees late Tuesday afternoon.
Chicago-based
CNA's New York office employs 300 workers just blocks from the World Trade Center.
"We could have had a large number of employees traveling and we have been checking and rechecking the flights," said CNA spokesman Charles Boesel. The company said it was too soon to assess the impact on its operations.
Tribune staff reporter Bruce Japsen and Tribune wire services contributed to this report.