The World Trade Centre attack has been cited as the source of most of the insurance industry's current woes. But is this fair, asks Michael Faulkner.

One year on, the memories of the terrorist attacks of 11 September have yet to fade in people's minds. It will be a long time before the horrendous images presented on television are forgotten. And for those unfortunate souls who witnessed the events first hand, the memories may never truly be laid to rest.

The terrible events have also still to recede from the collective mind of the insurance industry: I refer not to the human tragedy suffered by the brokers and insurers, who had offices in the twin towers, but to underwriting and profits.

The past year has seen huge increases in premiums across most classes of business. This has been coupled with a more cautious approach to underwriting: more restrictive wordings and exclusions, and an increased aversion to risk. Insurers have also seen their investment incomes fall owing to the equity market crash.

And what is the cause of these changes? 11 September. Whenever insurers comment on their pricing, it is mentioned. Whenever the profitability of industry is discussed it is mentioned. The WTC attack has, and continues to be, promoted as a significant contributor to many of the woes that face the industry.

Is this justified? One cannot deny that the attacks caused the single largest loss that the industry has ever suffered - currently estimated at $50bn (£32bn). This is clearly going to have ramifications. But there are other serious issues affecting the industry.

A recent report published by Zurich explained in great detail the factors underlying its rating increases. The World Trade Centre attack was only one of a large number of contributing factors. Its ratings were limited to property insurance where large flood and fire claims were also factors. It certainly put things in perspective.

Factors such as increased claims costs, legislative reform and flooding are issues which are having a significant impact on the industry, with wider ramifications. The liability crisis facing contractors is but one example.

The WTC attack was a tragic and significant event. I do not wish to deny that. But it must not obscure, or detract from, the other serious issues that face the industry. At the very least, it will do the industry's credibility no good if the business community feel that we are unjustifiably blaming all our woes on it.