The great majority of insurers are strong enough financially to ride out this disaster. But face it, loss estimates are still rising. I expect the end result will trigger a number of mergers, major and minor, and several liquidations.

Given the backdrop of terrorist induced chaos, insurance stocks did badly–although relatively well–in September. The industry's portfolio of 116 issues declined 5.28 percent. But that was a sparkling performance when compared with the major market averages, where the Standard & Poor's 500 was down 8.18 percent, the Dow was off 11.08 percent, and the most quoted NASDAQ Composite collapsed 17 percent. (Just for the record, the NASDAQ Insurance Index was off only 0.57 percent.)

The best-performing sector by far was the brokers, which advanced a hefty 6.57 percent. A.J. Gallagher led the group with a 27.69 percent surge to 35.85, from 26.51. Brown & Brown was another double-digit performer with a 17.79 percent advance to 52.10, from 44.23.

The terrorist attacks have ruined the operating results of property insurers and reinsurers. That will help bring about rate increases–most likely hefty ones. Insurance brokers are in an enviable position. They should be able to see their top lines increase while expenses hold steady. The operating earnings of selected brokers could surge.

And let us keep in mind that insurance brokers are not in the risk-taking business. They perform a valuable service and end up with a piece of the action.

I am both optimistic and worried. I am pleased and proud that the insurance industry is united, financially strong, and determined to settle claims without falling back on any exclusionary clauses in policies. But I am also worried–in particular about two possibilities.

First, there is the possibility that terrorists will strike again. If they do, there is the probability of major, if not massive, insured property losses.

Second, I hear that a number of companies small and large calculate that they have run through all their layers of reinsurance protection. So, without any further help from terrorists, the insurance industry already has some serious financial problems to cope with.

Hang in there, friends. Stand tall with our industry. And, God Bless America!

Thomas K. Meakin is affiliated with LIM Systems International in Voorhees, N.J. Stock results are supplied by The Firemark Group in Morristown, N.J.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, October 22, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

Contact Webmaster