Airlines and the US airports will shoulder an equal portion of liability claims resulting from the New York city attacks, according to the Insurance Information Institute (III).
The III's chief economist in Washington, Dr Robert Hartwick, said the liability issues with airlines are potentially enormous, as there were security breaches on the hijacked planes and at the airports from which they set off.
“We have an issue where there will be culpability on both sides,” said Hartwick.
He added that the level of property claims will depend on whether the insurer has an exclusion for acts of terrorism in its policy wording.
The World Trade centre had cover for terrorism until the 1993 bombing. Hartwick said it is likely that the building is no longer covered as many insurers inserted exclusions for terrorist attacks after this.
He added that many companies could find they were under-insured for the World Trade Centre disaster. “This is the absolute worst case scenario - the complete and total destruction of both towers,” he said.
“People do not insure for the worst case scenario as they cannot imagine it.”
Hartwick predicts that the reinsurance market will face a further hardening. “Rates will rise, as the limits of insurance have been exhausted and there is the view that is this could happen in New York, it could happen anywhere,” he said.
The tragedy will be catastrophic for the life industry, he added, as it is th
