Insurance for Catastrophes

Philip Roberto accuses insurers of conducting a “financial assault on consumers” after the Oklahoma City bombing, by seeking to exclude terrorism and all other crimes from insurance policies (letter, May 26). While we can all agree that many insurance companies can improve their claims handling, Roberto shows he is uninformed on the nature of insurance policy coverage.

Many intentional criminal acts, such as vandalism, arson, fraud, theft, extortion and robbery, are covered by property insurance contracts. Infrequent catastrophic loss like war and military action are not, and have not been for a long time. A fair debate may occur over how to classify terrorism: Is it war or is it crime?

Roberto is also not forthcoming about the huge financial losses due to catastrophes sustained by insurers in the last five years. For five of the last six years, underwriting losses have averaged $20 billion. The last time the industry had an underwriting profit was 1979.

I invite Roberto to start his own property insurance company if he believes it is such a profitable venture. He should just be sure to offer policies in all the areas he claims we do not: Oakland Hills, Malibu, Laguna Hills, Altadena, South-Central Los Angeles, the San Francisco Marina District--and while you are at it, the Sacramento Delta flood plain. Most property insurers have been able to stand by their policyholders after this string of disasters because they prudently manage policyholder funds in the face of huge losses. Would Roberto put his money in a bank or insurance company about to go broke because it took careless risks? I don’t think so.

PETER GORMAN

Associate Vice President

and Regional Manager, Alliance

of American Insurers

San Francisco