In our November 2001 newsletter we reported that the loss estimates from the attacks for all exposed insurers exceeded US$30 billion. There was an initial estimate indicated at US$70 billion and the payout to date is US$30-35 billion.

The good news is that no insurance company was bankrupted because of the September 11 terror attacks. Because of reinsurance, no single company bore the brunt of the claims.

Reinsurance enables the spreading of the risk 'behind the scenes' around other insurance based security - rather than the primary insurer carrying the entire risk themselves.

What this showed was that industry dynamics means that a large loss can be absorbed because it will spread throughout many insurers and reinsurers.

Fingers crossed this will never happen again, however nice to know in respect to natural disasters where insurance responds. (Speaking of natural disasters, the US has been hit hard this year with four hurricanes; Charley, Frances, Ivan and Jeanne, producing insurance losses in excess of US$25 billion.

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