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Insurance claims to reach billions
September 12, 2001: 4:27 a.m. ET

The WTC attack could be the costliest man-made disaster
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NEW YORK (CNNfn) - Insurance claims stemming from the terrorist attack on the World Trade Center in New York Tuesday could total billions of dollars.

Costs associated with the World Trade Center attack will likely surpass the $775 million in costs caused by the 1992 Los Angeles riots, which ranked as the most costly to date, according to the New York-based Insurance Information Institute.

The 1993 bombing of the World Trade Center caused only $510 million in claims, while the 1995 Oklahoma City bombing resulted in $125 million in losses, the insurance group said.

"This makes the World Trade Center bombing [in 1993] look like a house fire," said Joe Annotti, spokesman of the National Association of Independent Insurers, who said claims could reach into "the multi-billions of dollars." Losses will cover property, life and auto.

Swiss Re, the world's second-biggest reinsurer, said on Wednesday it had adequate funds to cover any claims related to the terror attacks. The company estimated claims to match those of the 1999 European storms that cost the insurance industry about $15 billion.

The Zurich-based company's losses are expected to be about $1 billion, according to some reports.

Lloyd's of London, the world's biggest insurance market, said it needs 48 hours to asses the impact to its business.

With an estimated 40,000 people working in the World Trade Center and about 150,000 daily visitors, it will be hard to predict how the attack will affect insurers.

"From a life insurance perspective, it's too early to tell," a Northwestern Mutual spokeswoman said.

Northwestern Mutual, whose core product is life insurance, does not expect any claims for the next few days as most people will be more interested in checking on family members.

"There is nothing we can compare this to," the spokeswoman said. "This is not similar to any type of natural disaster."

For property and casualty insurers, the real wild cards will be the surrounding businesses that are affected by the attack and the workers compensation incurred for employees killed or injured, NAII's Annotti said.

"The buildings and workers comp will jack up the total costs from this event," Annotti said. "The loss of life is incalculable."

State Farm, which handles claims primarily for small business, also does not have a damage estimate, spokesman Phil Supple said. However, the insurer's "react" teams are prepared to converge on the scene.

"Insured losses will take a few days when priorities allow for the insurers to come in," he said. "People are just trying to get out and get medical care."

Costs to the airline industry will also be significant. The Federal Aviation Administration has suspended all commercial flights at least until noon Wednesday, which will result in hundreds of millions of dollars a day in lost sales. Losses will likely "significantly exceed" the $2 billion dollar annual loss the industry posted the year of the Gulf War, one analyst said. graphic