Now, in the wake of the World Trade Center attack, insurance firms severely afflicted, like Aon and Marsh, with “staggering loss” of life and experience–losses that impact others in the business who depended on them–must replace those people.

In addition, new capital streaming into the market at a “frenetic pace” is financing carriers that will look to get up and running quickly, putting further strain on an already flagging talent pool, she indicated.

In a speech on the impact of the WTC disaster on the global insurance market, Ms. Schroeder also made these points:

The returns are not yet in on the WTC debacle. The final tally will be in excess of $50 billion, but only $22 billion in claims have been paid to date. The really big exposures, although they were relatively light in the WTC attack, are on the life side and in workers' compensation, which she called “infinite exposures.” Also, there are lots more losses to come from the reinsurers, reporting later because “theyre farther back in the chain.”

Global insurance players should know that the geopolitical landscape has changed dramatically. Countries like India, China, Japan and Saudi Arabia are now “wild cards,” she said.

In the new environment of uncertainty, companies, in their planning, should consider at least three multiple-outcome scenarios.

The traditional insurance model has been affirmed. The notion that the insurance business needs to compete with Wall Street has been discredited.

The industry should look to “the dog that didnt bark”–tabloid newspapers and tabloid TV that didnt find the opportunity to “scream about widows and orphans not receiving claims payments.” To the contrary, the industry has “done a terrific job of taking care of its customers first, and everything else second.”

Having fulfilled its “enormous responsibilities,” the industry is now left with the tasks of putting a price tag on terrorism and then telling its customers they have to pay more for their insurance, this at a time when it is repairing itself–a “heroic amount of work” not fully understood, she said.

Leading audience applause, Ms. Schroeder declared, “the industry has its own share of heroes and they should be recognized.”

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, November 12, 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.

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