Insurers May Get Relief.

• Position: Business Briefs - Brief Article

A key aspect of recovery after any kind of disaster is insurance. Losses of an unprecedented scale from the Sept. 11 attacks are likely to clobber reinsurance companies -- providers of the ultimate safety net -- but may win domestic insurers relief in the form of a huge loss-sharing pool for future terrorism-related coverage.

U.S. insurers stoutly maintain that they can pay all claims stemming from the attacks. Looking forward, however, insurers argue that a series of terrorist acts or other catastrophes of similar magnitude could imperil their industry's solvency. Dean R. O'Hare, chairman and CEO of the Chubb Corp., testified before Congress that "the industry has a specific amount of capital which cannot insure risks that are infinite and impossible to price."

O'Hare argued that Americans will demand increased coverage for terrorism-related risks. "Unfortunately' it is becoming apparent that as current reinsurance agreements expire, they will be renewed only with a terrorism exclusion, and therefore, it will be impossible to provide our customers with terrorism coverage," he said. Chubb has estimated its own losses from the attacks, net of reinsurance, at $500 million to $600 million pretax.

Edward Kaplan, who heads the healthcare consulting area for The Segal Co. in New York, expects the major group life insurers involved to be able to handle the losses. Metropolitan Life Insurance Co., The Hartford and Prudential Life Insurance Co. were the hardest hit, he says, with hundreds of millions of dollars in life claims -- though he believes the payouts will be less than 1 percent of these firms' present net assets. Workers compensation and property/casualty lines...