The Sept. 11 terrorist attacks on the World Trade Center and the Pentagon are expected to bring the highest insurance claims in U.S. history.

However, it is not expected to have an immediate impact on individual rates, except perhaps for property insurance.

Estimates of claims for life, property, injuries, workers compensation and business interruption range from $15 to $40 billion.

"Clearly, we can't put a specific number on it yet," says P.J. Crowley, vice president of the Insurance Information Institute.

As the death toll continues to climb, the U.S. life insurance industry, which has $3.1 trillion in assets and liquid reserves, says it is ready to pay claims to families of attack victims.

"We process more than 10,000 benefit claims on a daily basis. We prepare for the unexpected. That's our job," says Jack Dolan, a spokesman for The American Council of Life Insurers. "Although Tuesday's events were a shock, we are prepared for it."

In 2000, the life insurance industry paid a total of $44.1 billion dollars in death benefits on 3.8 million life insurance policies. Industry experts expect the Sept. 11 tragedy to have little impact on future life insurance costs.

Property and casualty insurers are bracing for an onslaught of claims as well. Numerous insurers will be affected by the attacks.

But because a large number of companies insured attack victims, the financial costs of the terrorist attacks will be spread among many insurers, reducing the impact on any single company.

"No one company is going to bear the brunt of the burden," Crowley says.

Hurricane Andrew hit the eastern seaboard in 1992 and resulted in $15 billion in losses. Some smaller insurance companies struggled to pay claims made by policyholders in the storm's aftermath.

"There were some insurance companies that went bankrupt because their risk was concentrated in a specific line in a specific location," Crowley says. "And when the hurricane hit they were unable to cope."

Since then, insurance companies have been careful to spread risk across several product lines so as not to be devastated by a single catastrophe, even one as large as the World Trade Center attack.

"There's no doubt the insurance companies can stand it," says Robert Hunter, director for insurance for Consumer Federation of America.

While autos and nearby residences were damaged by the plane attacks and the subsequent collapse of the World Trade Center, the greatest losses will be felt in the commercial insurance market.

Following Hurricane Andrew, property owners across the state of Florida saw their insurance costs skyrocket. Business owners, especially those in New York City and New York, will likely see a rise in property insurance costs.

"You might see primary rates go up for commercial accounts, particularly worker's compensation and business interruptions insurance," Hunter says.

"The biggest impact will be in New York, but clearly it will spread beyond that."

Businesses seen as targets for terrorism, such as Disney World or the Sears Tower in Chicago, may have to pay more for insurance as well.

"Any time you have a historic and tragic event like this, there will be lessons learned both in the business community and the insurance community," Crowley says.

Individual insurance policies are less likely to be impacted. Just how much business insurance costs will increase is tough to say.

"It's too early to tell until we understand the full dimension of what's involved here," Crowley says. "Other than to say, this is why we have insurance."

-- Posted: Sept. 18, 2001