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Insurers call for pool
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September 26, 2001: 5:16 p.m. ET
Chubb CEO says series of attacks would otherwise challenge insurers
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NEW YORK (CNNfn) - Insurers speaking before Congress Wednesday warned that a series of terrorist attacks, or catastrophic events, would test the financial mettle of the industry.
The insurance sector will be able to pay all claims stemming from the terrorist attack of Sept. 11. In fact, the industry can absorb another catastrophic event on par with the destruction of New York's World Trade Center. But more such attacks would challenge the sector's solvency, insurers said.
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The WTC destruction will cost insurers billions of dollars and could even surpass the costs of Hurricane Andrew in 1992. Insurers paid more than $19 billion for that natural catastrophe. U.S.-based insurers, as well as international providers, are expected to foot the bill for the attacks of Sept. 11. Claims could range from $20 billion to $30 billion, or even higher.
Insurers Wednesday warned that if terrorism were to continue in the United States, the government would likely have to step in as the insurer of last resort.
Chubb Corp. Chairman and CEO Dean O'Hare, testifying before the House Financial Services Committee, cautioned that a series of attacks would test insurers. "The industry has a specific amount of capital which cannot insure risks that are infinite and impossible to price," he said.
Chubb has estimated its exposure at $500 million-to-$600 million. As current reinsurance contracts expire, they will likely be renewed with terrorism exclusions, O'Hare warned.
He called on Congress to form an insurance pool specific to terrorism, similar to the one formed in the United Kingdom following the attacks there due to the conflict with Northern Ireland. 
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