Insurers ride out year of disaster
THE terrorist attacks on the World Trade Centre caused the largest single loss in insurance history - but 2001 was still not the industry's worst year on record, figures show.
Insurance giant Swiss Re estimates that even though the overall cost of 11 September will reach £65bn, four-fifths of those losses were not insured. The company's catastrophe statistics for the global insurance industry show that 2001 will cost the sector less than either 1992 or 1999.
None of the annual figures include liability and life assurance. For 2001, these could add a further £55 billion to the bill. But they show that the most devastating catastrophe of last year, in terms of the numbers of lives lost, will make almost no impact on insurers' profit and loss accounts.
More than 15,000 people were killed in the Gujurat earthquake in India, yet a large part of the £500m of loss and damage was uninsured. Of the five deadliest disasters of last year, only the New York attacks, in which 3,300 people died, cost insurers dear.
That is because insurance for individuals and buildings in developing countries, where some of the worst loss of life occurred, is still regarded as an unaffordable luxury.
So there will be little by way of financial compensation for Algeria, where 886 people were killed in torrential rain and flooding in November, or for El Salvador, where 844 died in the January earthquake.
The relatives of the 350 immigrants who perished when their boat sank off Indonesia in August will almost certainly end up empty-handed. The low financial toll of these natural disasters combined with the stratospheric cost of 11 September meant that 2001 was the first year for more than a decade when man-made catastrophes cost more than natural ones, according to Swiss Re.
But the report shows there were two other man-made disasters that cost more than $1bn last year - an oil-drilling platform that sank off Brazil and the Code Red computer worm spread by e-mails. The final tally for last year's insurance losses could rise, however, if the US District Court decides the attacks on the twin towers were two incidents rather than one.
Larry Silverstein, who leased the towers, is seeking a ruling that the attacks were two separate events, which could mean insurers having to pay £2.5bn for each tower.
Swiss Re, the major insurer of the towers, is arguing that the wording of Silverstein's insurance policy makes it clear that the attacks should be seen as one incident.
