Sept. 11 losses reach $9.3 billion

U.S. property and casualty insurers' net claims resulting from the Sept. 11, 2001, terrorist attacks reached $9.3 billion as of Dec. 31, 2002, compared to $8.5 billion reported through Dec. 31, 2001, according to a Sept. 4 news release from Weiss Ratings Inc.

Weiss reviewed more than 2,150 financial statements filed with the National Association of Insurance Commissioners. and found that two companies owned by Berkshire-Hathaway General Reinsurance Corp. and National Indemnity Co. had a combined loss of nearly $2 billion from Sept. 11, representing 20.6 percent of the total losses. .

"Although final claims may not be known for years, domestic insurers were effective at spreading the risk for such a catastrophic event," said Melissa Gannon, vice president of Weiss Ratings Inc.

In 2002, Congress enacted the Terrorism Risk Insurance Act. TRIA calls for a temporary federal program where the fed-eral government shares the risk of loss from certain acts of terrorism with the insurance industry. Insurers are required to pay a deductible, which increases as the program ages, before federal assistance becomes available. Once the deductible is met, there is a 90/10 coinsurance agreement between insurers and the government. Insurers assume 10 percent of the losses, while the government assumes the remaining 90 percent, up to the TRIA liability cap of $100 billion.

Federal coverage is provided only if certain conditions are met. Those conditions include a specific definition of a terrorist act and a minimum loss threshold.