Posted on 04/01/2006 8:50:54 PM PST by FairOpinion
The American Academy of Actuaries disclosed that a future large terrorist attack in New York City could result in $778 billion in insured losses.
Speaking at the National Association of Insurance Commissioners public hearing on "Terrorism Insurance Matters," Michael McCarter, chairperson of the Academy Terrorism Risk Insurance Subgroup, provided potential property and casualty, and group life insurance losses as a result of various types of terrorist attacks. His group estimated potential insured losses from a conventional truck bomb terrorist attack, as well as medium and large chemical, nuclear, biological or radiological (CNBR) events caused by terrorism.
"The largest CNBR event we modeled caused $696 billion in property and casualty losses and $82 billion in group life insurance losses," said McCarter, whose subgroup used catastrophe risk models by AIR Worldwide to generate insurance cost figures.
The subgroup was created by the Academy after receiving requests from Congress for actuarial analyses as it considered the reauthorization of the Terrorism Risk Insurance Act of 2002 (TRIA) last year.
According to the models, a truck bomb attack in New York City could cost $11.8 billion and a medium CNBR terrorist attack could cost $446.5 billion. Models for three additional U.S. cities also were generated. In Washington, D.C., a truck bomb attack could cost $5.5 billion, a medium CNBR event could cost $106.2 billion and a large CNBR could cost $196.8 billion. In San Francisco the costs for those events were estimated to be $8.8 billion, $92.2 billion, and $171.2 billion, respectively, while in Des Moines, Iowa, the costs could be $3 billion, $27.3 billion, and $42.3 billion.
McCarter says that much of the property and casualty insurance market could be financially incapacitated in the event of a large terrorist attack. "Our largest modeled CNBR loss is more than two-thirds higher than the entire property and casualty insurance industry surplus," he said. "In the absence of TRIA or some other national framework for dealing with terrorism insurance losses, many commercial lines insurers would be devastated."
In early December, the Academy subgroup released a public statement about extending or replacing TRIA. It is currently preparing a report for the President's Working Group on Financial Markets, which will submit a report about the long-term availability and affordability of terrorism insurance to Congress by Sept. 30, 2006.
Wouldn't any sane person rather spend money preventing an attack, than spend much more rebuilding New York and the US economy, after such an attack.
The costs they are quoting are only the direct costs, not the cost on the US and world economy.
If the whole ME was nuked, what would that cost the world?
--IMHO--hogwash--
Ah.
So the most sophisticated modeling of the effects of various types of terrorist attacks should just be dismissed.
The WTC & Pentagon were about $20B combined.
You don't think a nuclear attack could be 40 times that?
--that would have to be a mighty big truck--and sure depend on where it was parked--
Well, assuming the oil fields were also radioactive, the costs would be astronomical. Even a short, but sustained disruption of Middle East oil supplies could cause global depression on a scale not seen since the 1930s. Why do you ask?
Is this an April Fools post? The direct cost would pale in significance to the indirect costs, such as loss of tourism and ripple effects like productivity, etc.
--If it isn't , it should have been--
It is the direct costs that would be covered by insurance; or not covered and leaving people SOL depending on the policy provisions.
Exactly - whatever the cost to avoid another another terrorist attack on U.S. soil (even TRILLIONS in Iraq) is worth it IMO.
It is only because we stress legalities and impose monsterous civic policies that we absorb such losses.
You are quite correct that spending far less on direct and dedicated measures would be more effective and economical. Let's all ask ourselves why we don't do that. The reasons are ugly, in fact they diminish our pride and commitment to fight.
That, too, is no accident.
(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")
New Orleans was "destroyed" by a natural disaster, and people question the amount of money it will take to rebuild a city much smaller than New York, but larger than Washington (from a geographic perspective). Why should the cost estimates come as a shock?
That's even more costly than Hurricane Katrina.
Acts of war are usually a specific exclusion.
Pretty good reasoning on why Detroit won't be a victim of a major terror attack, it has no value to terrorists.
But the interpretation of act of war to include terrorism has been an issue, since there's no declared or easily definable war, and insisting on such a point is politically problematic.
I haven't kept up on what progress companies have made in terms of wording for commercial insurance; I know the regulators were very wary but it seems to me by this time terrorism must specifically be excluded and added on as an endorsement?
Given appropriate help by the MSM, if somebody scotch-tapes a large firecracker to an old luminous watch dial and detonates it in the New York City financial district, the taxpayers will end up paying a couple of million dollars to everyone in a ten-block radius---
Trillions. Merely the disruption of air, land, and sea trade patterns alone would be astronomical. Try shutting down the Suez Canal, Alexandria, all the Turkish ports, the Dardanelles, and so on. That's without ever getting into the value of oil, or the irradiation of Israel. It's beyond stupid as a suggestion.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.