WASHINGTON — The terrorist attacks on the World Trade Center and other facilities on Sept. 11, 2001 were "a disaster… that neither our country nor the insurance industry had dared to contemplate," as stated by New York Insurance Superintendent Greg Serio in congressional testimony later that month.
The event took its toll on Serio — his predecessor was killed in the attack. Two MetLife associates housed in a sales office in the World Trade Center were also among a total of 2,976 people who died in the multi-pronged attack.
"Without question, the assaults of September 11 represent the costliest disaster in American history," said Michael Oxley, chairman of the House Financial Services Committee, at a hearing on the issue later in the month.
Oxley also sought to sooth the country by saying that the committee had received assurances that insurers would not attempt to invoke the acts-of-war exclusions contained in their policies.
However, losses to the life insurance industry were estimated at only $1.3 billion, just three percent of total losses, and represented less than 5 percent of total premiums written in 2001, according to estimates from the Insurance Information Institute.
Sy Steinberg, chairman, president and CEO of New York Life Insurance Co., put it into perspective this way, said during the 9/11 hearing:
"While the amount of these claims is staggering, the monetary exposure is, in fact, a fraction of the $52 billion in death claims paid last year by the life insurance industry as a whole, and therefore, will not have a material adverse impact on the industry."
It follows that there were few insurance industry regulatory changes as a result. The most significant long-term regulatory impact was, the attacks prompted enactment of the Terrorism Risk Insurance Act in November 2002, which provides a federal "backstop" for claims related to acts of terrorism. The program deals only with property and casualty claims, not life. It has been reauthorized twice, but has not yet resulted in any losses to the taxpayer.
Life Insurance Council of New York officials also said that besides the death of Neil Levin, the state's former insurance commissioner, and the two MetLife employees, no other life insurance official died on that fateful day.
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This chart from the Insurance Information Institute represents the percentages of losses to various factions of the insurance industry as a result of the Sept. 11, 2001 terrorist attacks.
What about brokerages?
Insurance brokerages suffered a large toll, with Marsh & McLennan losing 295 employees and 63 consultants; Aon Corp., 175; Guy Carpenter 2 and Zurich Insurance 4.
It was also the worst terrorist attack on record in terms of fatalities and insured property losses, which totaled about $25.2 billion (in 2015 dollars), with total claims of about $43.6 billion (in 2015 dollars), including property, life and liability insurance claim costs, according to the Insurance Information Institute.
But there was more to the industry's response than dollar signs.
"This is a time for the insurance industry to be visible," New York Life Insurance Co.'s Sternberg said during a House Financial Services Committee hearing convened later in September 2001. "This is a time for us to be charitable. And this is a time for us to stand as a pillar of stability in a none-too-stable world."
So the insurance companies worked with regulators to deal with the issue of some 9/11 victims having no death certificates, while the American Council of Life Insurers worked with the New York Life Insurance Council to develop an affidavit to complete these claims.
ACLI CEO Carroll Campbell also met with administration officials, including President George W. Bush the week before the hearing to "make clear the life industry was 'strong and ready to pay the claims,'" according to an ACLI official.
MetLife and New York Life were also part of a broad industry response that included stepping up purchases of stock in U.S. companies as well as donations to the Red Cross and charities established to help people impacted by the attack.
Michael Oxley, chairman of the House panel, specifically described the 9/11 losses as a "clash" event.
That is, Oxley said, "the insurance industry incurred multiple losses in different lines of coverage arising from the same underlying cause." He explained that clash events are riskier for insurers as they give rise to claims from a variety of different customers under different types of policies, in a scenario outside of normal assessments for aggregate exposures.
A key to the life insurance industry's response was that companies waived the traditional requirement for a death certificate. At MetLife, chairman and CEO the late Robert Benmosche said the company relied on airplane passenger manifests or a communication from the employer. Benmosche noted that more than $53 million were approved for payment before September was approved for payment to beneficiaries, "with the first payment being authorized three days after the tragic events."
Benmosche said that a significant number of MetLife's policyholders in the World Trade Center were insured through group life insurance programs. Benmosche said that MetLife worked closely with employers affected by the disaster to process life insurance claims quickly.
