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Risk Management & Insurance Post September 11: Analysis & Comparison

Explore the impact of September 11, 2001, on insurance companies, liability issues, and catastrophic property losses like Hurricane Isabel. Understand the Terrorism Risk Insurance Act of 2002 and global implications for insurers. Delve into risk terminology and management processes, with case studies and insights from various industries.

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Risk Management & Insurance Post September 11: Analysis & Comparison

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  1. Topic 1. Introduction Bus 200 Introduction to Risk Management and Insurance Jin Park

  2. Overview • September 11, 2001 • Who suffered a loss? • Who’s liable? • Hurricane Isabel • Similarities and dissimilarities between them.

  3. September 11, 2001 • Who suffered a loss from the attack? • Owner of the WTC • Tenants of the WTC • Survivors • Business owners around the WTC and in NY City • NY City and US as a whole • Insurance Companies – Primary insurers and reinsurers • Other economies in the world

  4. Globalization

  5. September 11, 2001 • Why did insurance companies suffer? • What happen to real estate industry and why? • Terrorism Risk Insurance Act of 2002 • November 26, 2002 to December 31, 2005 • Certified Act of Terrorism - the Secretary of the Treasury must certify

  6. Reinsurance • Private reinsurers are not willing to provide coverage due to the catastrophic nature of terrorism. • In 2001, Swiss Re posted a loss for the first time in its history. • Pooling among insurers.

  7. Top 10 Catastrophic Property Losses

  8. Liability Issues • Owners of the property • Employers • Airline companies • Airport authority • U.S. Government • Osama Bin Laden, Al Qaida ?

  9. Hurricane Isabel • Insured loss is about • $600M from wind-related losses • $1B from flood-related losses • Similarities and Dissimilarities

  10. Next • Risk and Terminology • Chapter 1, pp. 10 – 13, 18 – 20 • Risk Management: Understanding the Process, Contingency Planning and Management, May 2000 • What’s Your Risk Metric?, CFO.com, July 12, 2001. • Enterprise Risk Management at Wal-Mart, Risk Management, December 2003. • Changing times – Changing demand, Rural Communications, May-June, 1999.

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