Today we are in the post WTC terror attacks Insurance Practice.

After the 9/11 terror attacks, global insurance premiums increased by 500%. The main consequential events igniting this unprecedented rise in premium are due to the following:

• The closure of US airspace for several days after the incident causing added global disruptions
• Marsh and Aon lost a large number of employees
• There was a severe damage caused to a major communication switch resulting in a severe disruption for beyond lower Manhattan.
• Insurers and reinsurers had no specific protection to deal with this type of clash events.
• Virtually every class of insurance was hit.

Following this shock, the insurance industry undertook a radical change in its was of doing business and can be summarized into 4 change factors:

Investment Strategy: Due to the fall of equities following WTC, insurers started investing in cash and government bonds

Pricing Model: A considerable actuarial input was introduced to premium pricing and calculations.

Catastrophe Model: Large risks in catastrophe zones could not be insured unless it is carefully entered into the reinsurance ERM

Greater underwriting discipline: Systems and controls were introduced to underwriting guidelines and policy issuance.

Today, we are on the verge of post Covid-19 insurance market and post Insure-tech insurance modules. I promise to elaborate this in future articles whenever my informations are accurately gathered.

Roy Keyrouz