10:35pm 09/11/01 Mounting oil risks to U.S. reaction?...
By August Cole
London's Control Risk Group says there could be an adverse reaction by oil producing nations Iran, Iraq, Kuwait, Lybia and Saudi Arabia should the U.S. retaliate in response to Tuesday's terrorist attacks, reports Dow Jones. As well, this sort of action might keep oil tankers from sailing to the Middle East, Dow Jones said traders noted. However, OPEC has been clear it will keep up with the supply of oil. Brent crude oil prices in London trading topped $30 a barrel after the attacks in Tuesday trading. Nymex oil futures are expected to hit that level, said Phil Flynn of Alaron.com, when trading does resume. <<
1:07am 09/12/01 DC officals to ask IMF to delay meet--AP By Allen Wan
District of Columbia officials said they may ask the World Bank and International Monetary Fund to postpone their fall meetings in the wake of U.S. terrorist attacks, the Associated Press reported. The Sept. 29-30 meetings are expected to draw tens of thousands of protesters, and intense security in the nation's capital.
Insurance claims to reach billions
Huge losses seen in life, property, workers' comp
By Kristen Gerencher & Mike Tarsala, CBS.MarketWatch.com
Last Update: 4:12 PM ET Sept. 11, 2001
SAN FRANCISCO (CBS.MW) -- The attacks on the World Trade Center and Pentagon are expected to be the most costly, man-made catastrophe in U.S. history and the insurance industry will struggle to absorb billions in expected losses, experts said Tuesday.
Industry officials said the insurance market's reserves, known as reinsurance, might be unable to pay out the massive claims. The Federal Reserve said it would provide additional money to support relief efforts as needed.
"Clearly, this is the sort of event no one could have anticipated," said Candysse Miller, a spokeswoman from the Insurance Information Institute in Los Angeles.
The World Trade Center's two towers plus two other buildings on site were valued at $3.2 billion this year and the complex could cost an estimated $2.5 billion to $3 billion to construct today, excluding the cost of the land. See full story.
Insurance companies may need temporary federal reinsurance to cover losses, said Robert Hunter, Director of Insurance for Washington-based Consumer Federation of America. But the industry should be able to weather the latest catastrophe, he said.
"Even after Hurricane Andrew, which was $15 billion in reported losses, only eight companies had financial difficulties and all claims were paid," Hunter said. "The industry bounced back."
Munich Re, the world's largest reinsurance company, said it expects considerable damage claims from the terror attacks on New York and Washington, according to the Financial Times.
U.S. property-casualty insurer Chubb (CB: news, chart, profile) said it has "significant property exposure" in the World Trade Center and estimated its pre-tax loss at $100 million to $200 million, subject to revision as more facts become known.
"The company will also pay customers' claims under business interruption, accident and workers' compensation coverages, but it is unable at this time to quantify the potential exposure for these losses," Chubb Chief Executive Dean O'Hare said.
Forthcoming claims for loss of life, property, injuries, workers' compensation and business interruption are certain to surpass the largest, non-natural U.S. disaster to date -- the Los Angeles riots of 1992, which cost $775 million in overall insurance losses.
The 1993 bombing of the World Trade Center brought $510 million in claims, and the Oklahoma City bombing, the most deadly terrorist attack in the U.S. until now, wrought $125 million in claims six years ago.
The U.S. government is self-insured, so physical loss to government buildings like the Pentagon isn't a commercial issue, the insurance institute said.
Property policies typically cover terrorism, but they exclude acts of declared war, Miller said. Still, in light of increased global terrorism, some commercial policies have exclusions for damage caused by terrorist attacks.
There also will be health insurance claims from potentially thousands injured in the buildings' collapse and ensuing workers' compensation claims from those killed or injured on the job.
"It will be enough of a magnitude that it may trigger some disaster planning" within the industry, Hunter said.
Added Miller: "This will throw a whole new set of issues at risk managers."
"An event like (Tuesday's) is going to cause us to rethink a lot of things in this country, whether it's financial markets or airport security," she said. "But how that plays out is anyone's guess."
Kristen Gerencher is a reporter for CBS.MarketWatch.com in San Francisco.
Mike Tarsala is a San Francisco-based reporter for CBS.MarketWatch.com. |
