The American Academy of Actuaries said Wednesday 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 (NAIC) public hearing on "Terrorism Insurance Matters" was Michael McCarter, chairman of the Academy Terrorism Risk Insurance Subgroup. He provided potential property and casualty and group life insurance losses that might occur as a result of a conventional truck bomb terrorist attack, and medium and large chemical, nuclear, biological or radiological 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 Mr. McCarter, whose subgroup used catastrophe risk models by Boston-based 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:

o A truck bomb attack in New York City could cost $11.8 billion and a medium CNBR terrorist attack could cost $446.5 billion.

o 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.

o In San Francisco, the costs for those events were estimated to be $8.8 billion, $92.2 billion and $171.2 billion, respectively.

o In Des Moines, Iowa, the costs could be $3 billion, $27.3 billion and $42.3 billion.

Mr. McCarter said that much of the p-c 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.

Special Reports /

Actuaries: Future N.Y. Terror Toll Could Top $778B

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