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Old 09-12-2001, 02:42 PM
mske mske is offline
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This article makes an interesting point that I had not thought of. Namely;
Some analysts estimated the attacks could cost more than $40 billion, double what a bad hurricane might cost, but they noted that terrorist acts were likely to be excluded from many policies, which could considerably reduce the bill faced by insurers
How are companies with this exclusion in their policy going to cope? Will they have any resource available to them? Will insurance companies play nice and pay out anyways?
Old 09-12-2001, 02:46 PM
Crusoe Crusoe is offline
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I doubt the insurers will pay out. However much the PR could look good, I don't think that they could afford it -- and the general public could justifiably condemn their publicity-seeking at a time like this.
Old 09-12-2001, 02:54 PM
evilhanz evilhanz is offline
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I thought this was a duplicate thread, but I can' find the original.

That article vastly overstates the costs. Read Reinsurance Companies Wait to Sort Out Cost of Damages at the New York Times website.
The attacks on the twin towers of World Trade Center could cost insurers more than $5 billion, making the suspected terrorist attack on the 110- story skyscrapers the most costly man-made catastrophe ever, analysts said yesterday
While it is expected to take years for the insurers to sort out the losses, dozens of insurers are expected to bear the cost of the damage, including the cost of the towers, ... Reinsurance companies may eventually pay the most for the attack, since underwriters usually protect themselves from potentially crippling losses by splitting the risks — and the premiums — of big policies. Big reinsurers like Lloyd's of London, the Munich Reinsurance Company, Berkshire Hathaway and Swiss Re could be the most exposed, analysts said ...
The value of the WTC,
The World Trade Center was valued at $1.2 billion this spring when the Port Authority, which owns the complex, leased the buildings for 99 years to a consortium led by Larry A. Silverstein for $3.2 billion
On personal losses,
Dean R. O'Hare, chairman and chief executive of the Chubb Corporation, said that even with reinsurance, the attack could cost his company $100 million to $200 million.

"In addition," Mr. O'Hare said, "the company will also pay customers' claims under business interruption, accident and worker compensation coverages, but it is unable at this time to quantify the potential exposure for these losses."
It seems clear that most claims will be paid, even if reinsurers stick to their normal policy procedures and precedent.
Old 09-12-2001, 03:23 PM
Whack-a-Mole Whack-a-Mole is online now
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Originally posted by evilhanz
That article vastly overstates the costs.
I wouldn't be so hasty. There are a lot of costs beyond the property value of the buildings such as:
  • Life insurance premiums from those killed
  • Medical costs of those who survived but were injured
  • Clean-up costs which are likely to be considerable
  • Lawsuits out the ass (I shudder to think of the feeding frenzy attorneys will have on this one...airlines sued, airline manufacturers, airports, building owners, architects, construction firms and so on)
  • Lost business insurance (also likely to be quite considerable)

That's all I can think of for now but I bet there's more in there somewhere. Add it all up and I think $40 billion starts to sound cheap.
Old 09-12-2001, 03:33 PM
Jimson Jim Jimson Jim is offline
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This topic has been a subject of conversation in my office. Since I work as an adjuster for an insurance company its no big surprise. After a few hours of discussion yesterday afternoon we came to the conclusion the property damage would most likely be covered.

Frankly terrorism is not an expected exposure in American property insurance policies. It doesn't happen here with enough frequency that those who draft the policies consider it a risk worth calculating. The closest exclusion in the most common property policies excludes damage from "War and Military Action". War is not defined. If it’s not defined in the policy or by case law a term or word is construed in the policyholder’s favor if possible and the dictionary is the source of the definition. According to Webster’s War is “a state of open and declared armed hostile conflict between states or nations.” An insurer would be hard put to argue a terrorist act is an act of war. I’m sure someone will try. I can't see the courts supporting that reading of the policy.

On a more cynical note I would expect underwriters and insurance executives are already drafting the Terrorism Exclusion to be added to next year's policies.
Old 09-12-2001, 03:40 PM
xash xash is offline
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CNN said that terrorism was not part of the insurance exclusions. they didn't seem to specify much more.
Old 09-12-2001, 04:21 PM
friedo friedo is offline
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I was just watching CNN, and they said most insurance companies will pay out their policies.

They noted that if Congress declares the bombing an Act of War, insurance companies would not have to pay. If they do, it will be interesting to see which companies pay anyway.
Old 09-12-2001, 05:06 PM
Otto Otto is offline
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On a more cynical note I would expect underwriters and insurance executives are already drafting the Terrorism Exclusion to be added to next year's policies.
A standard exclusion in every policy of the insurance company for which I used to work is "Treatment, services and supplies for any injury or illness caused by (a) atominc or thermonuclear explosion or resulting radiation; or (b) any type of military action, friendly or hostile." Previous policies included language excluding coverage for any illness or injury resulting from "an act of war, declared or undeclared." So the exclusion is already there, since our company drafted model language. Companies who pay off will do so because of PR, rather than legal obligation.
Old 09-12-2001, 05:26 PM
Darqangelle Darqangelle is offline
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A friend of mine had planned a trip to NYC for a while now, but after yesterday's events has decided to change her mind (understandable).

Air Canada, however, will not let her trade in her ticket, nor will the cancellation insurance company accept her cancel request.


"Act of war"

And seeing as that's exactly what's been quoted over the last 36 hours on every cable network in the world, she seems to be SOL.
Hey, kids, always recycle... TO THE EXTREME!!
Old 09-13-2001, 11:21 AM
handy handy is offline
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'Insurance companies are going to be particularly hard hit,
because they're paying catastrophic claims on life insurance,
business insurance, workers' compensation insurance and
property insurance,'' said Jeof Hall, an economist at Boston's
Thomson IFR investment advisory firm. ''It's going to be a while
before they get back to normal.''

Michael Paisan, an analyst at Williams Capital, estimated that it's
possible insurance losses could top $5 billion. Reinsurers such as
Berkshire Hathaway Inc., Munich Reinsurance Co., and Lloyd's
of London - which offer excess layers of coverage - will probably
have the biggest exposure, he said."
Old 09-13-2001, 02:27 PM
toadspittle toadspittle is offline
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...The loan was covered by an insurance policy that does
not exempt terrorism, sources said.

"It has six pages of terrorism items," said one individual
familiar with the document. "Everyone is covered unless
there is a declaration of war."

"If they pay the claim and they will be out of business,
the insurance company may be more creative," warned
Alan Pomerantz of the law firm Weil Gotshal Manges.

Since President Bush said the destruction is an "act of
war," the insurance industry is watching closely for a
way out of payouts.
Old 09-13-2001, 02:35 PM
toadspittle toadspittle is offline
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So Silverstein just bought the WTC 6 weeks ago. The insurance policy for the loan IS covered against terrorist attacks. It is NOT covered against "acts of war." So if the U.S. declares war, Silverstein, GMAC, et al. may be out of a lot of dough.
Old 09-13-2001, 02:48 PM
mske mske is offline
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Latest news I am seeing here states that only 1 of the 2 WTC towers is insured - the idea being that there was no way that both could be destroyed...
Old 09-13-2001, 05:53 PM
handy handy is offline
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So they can ask Congress for money to put them back. Oh, wait, didn't they just ask for $20B? Yep.
Old 09-13-2001, 06:12 PM
Tom12 Tom12 is offline
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Federal Express and all other big delivery companies have clauses in their delivery contracts to protect them from delays beyond their control, like weather, acts of God, sabotage and such. While this might not be considered an act of war, it was beyond the control of Fed Ex, so their reimbursement comes into effect.

Besides, Federal, as well as other companies, use a basic policy for delivery reimbursement of something like 10 cents on the dollar up to something like $500. Nothing over $500 unless you pay more to take out full coverage, and that covers only up to a certain amount because there are too many ways to ship damaged goods and claim they were damaged in transit. Because of the inevitability of delays, they limit the claim amounts also, usually the basic one being just a repayment of the delivery cost.

In WW2, war was good for the economy because it sucked out around 1/3 of the population into the military during the end of the depression and opened up jobs for the rest. Plus, it put the economy on war footing, which means factories opened up with government loans or payment to produce war goods where none was needed before. Factories hired people at a livable wage, bought raw materials from previously nearly shut down sources and they had to hire people to meet the demand for the factories and then the attendant industries supplying food, transportation, clothing, housing and entertainment suddenly had a source of income again, so they picked up.

Instead of a grocer buying 20 dozen eggs a week, he needed 60, so the egg farmer obliged him and obtained more payment, and he spent more money on feed, which enriched the feed producer and so on and so forth in the trickle down theory.

It is said that WW2 pulled us out of the depression.

War is always good for munitions and arms manufacturers and those who make war machinery, like tanks and trucks, Hummers and mass transport cargo aircraft. I'm not even mentioning the war profiteering which is inevitable that still contributes to the economy.

Farmers, manufacturers, and forges usually go into major production because it takes a tremendous amount of goods to keep an army going. That requires money and forms of money, like ration stamps, which are backed by the government for restricted products.
I reckon it's time to KICK ASS!
Old 09-13-2001, 06:20 PM
ZipperJJ ZipperJJ is online now
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Fed Ex

I am waiting for a FedEx package and it says on their Web site that because of FAA restrictions, your package will "get there when it gets there."

Well okay, here is what it REALLY says:

We are unable to predict when services to and from Manhattan will resume. FedEx Express Money Back Guarantee will be reinstated once operations return to normal.
From what i gather from the rest of the statement on the site, even though it looks from what I quoted that FedEx is only having problems in Manhattan, I think they mean that money-back guarantee goes for all of the country.
Old 09-14-2001, 08:49 AM
toadspittle toadspittle is offline
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FYI--I heard on the news this AM that Silverstein et al WILL be covered for the damage. It sounds like, in this case, everyone agreed that "acts of war" refers to acts perepetrated by a foreign government, not by individuals.


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