The horrific events of September 11, 2001 fundamentally altered the insurance industry in a multitude of ways.

To examine those changes, we asked carrier executives, catastrophe modelers and five top risk managers to explain in their own words how the coverage landscape has been transformed in the wake of the attacks.

Click "next" to read their responses.

Peter Zaffino
President and CEO
Marsh Inc., a member of Marsh & McLennan Cos.

Marsh & McLennan suffered a grievous loss in the tragedy on the morning of Sept. 11, 2001. Of approximately 2,000 colleagues and consultants working in or visiting our offices in the Twin Towers, more than 350 perished. It’s a void that will never be completely filled.

In terms of the industry, the terrorist attacks of 9/11 generated profound effects on both the insurance industry and global risk-governance practices. From that day forward, preconceptions regarding the potential for, and exposure to, extreme or “worst-case” scenarios could no longer be deemed reliable.

In the decade since 9/11, the world has become flatter—more susceptible to reverberations—when it comes to the impact of adverse events. Tom Lawson
Executive Vice President
FM Global

9/11 forever altered the way the insurance industry looks at risk. Many insurers used to underwrite locations in major metropolitan areas without much thought for the aggregation of non-natural, catastrophe-related risk. 9/11 highlighted an unseen exposure, spotlighted the need for exposure analysis and introduced the crtical need for terrorism-aggregation modeling.

Sept. 11, 2011 was a wake-up call. For many organizations, terrorism became, and remains, a top-of-mind exposure. Overall, we see that insurers and insureds are much more aware of catastrophic risk—man-made or otherwise.

What hasn’t changed since the events of 9/11 is the importance of companies being prepared for any type of catastrophe. That starts with understanding your exposures, remaining vigilant in taking steps that can prevent or minimize loss, incorporating measures that protect people and property, testing emergency-response plans and having alternative plans in place to ensure business continuity.

Neal Aton
President & CEO
Wells Fargo Insurance Services

Impacts from 9/11 can be found in all areas of the insurance industry. The tragic events of that day forced buyers, insurance companies and brokers to face many changes and challenges. Insurance buyers now require their binders and policies to be delivered on time and to be completely accurate in case of an unexpected large loss.

Underwriters want to frequently review disaster-recovery plans and employee concentrations to better understand their exposure for workers’ compensation. Brokers must perform, and ensure carriers perform, at service levels the industry had never achieved before 9/11.

Overall, risk managers, risk consultants for carriers, and brokers have all spent the past decade working together to improve risk management and make the world a little safer. In particular, the level of thought behind safety and disaster recovery is significant compared to 10 years ago—a good change for everyone. The industry has risen to a new level of service and is always thinking of ways to help if another tragic event occurs.

Greg Case
President and CEO
Aon

Ten years ago, Aon lost 176 friends and colleagues as a result of the tragic events of Sept. 11. On this anniversary, as in the past, it will be a day for us to remember, reflect and renew.

As we honor their memory this year, we realize that their spirit continues to live on in all of us. One such example is that of a son of an Aon colleague who died on Sept. 11. When he graduated from college, he thanked our firm for the support he received, saying, “…Seeing the scholarships as a tribute to my father have made me work very hard to do my best.”

“To do my best” is a phrase that can be used to define the companies in our industry that stepped up and took on the risk so that our clients could do what they do best—and our economy could get back on its feet.

Jack Seaquist
Assistant Vice President and Terrorism Spokesperson
AIR Worldwide

While still in its early stages, the usage of modeling for terrorism has matured since 9/11 in the development of the underlying components of the model:

• Weapon-damage functions for the range of weapons that might be used by terrorists tuned to the urban-density environment.

• The development of scenarios based on an extensive database of potential targets across the sectors attractive to terrorists.

The main challenge remains the estimate of the overall likelihood of an attack. The estimates have been reduced over time as counterterrorism activities here and overseas have successfully prevented attempts at large-scale attacks. The result is that any attacks today are more likely to be performed by a small group or by a lone wolf who has the ability to plan and execute a plot from under the radar.

Gary Pearce
Vice President, Risk Management
Kelly Services

9/11 transformed risk management from an abstract dialogue to a mission-critical function. It redefined risk exposure, imparted a new sense of gravity to our work, and permanently expanded the scope and visibility of what we do.

People who lost friends and loved ones on Sept. 11 don’t need to be persuaded about the merits of risk management. Instead, they desire excellence in risk-management execution. No other event in our lifetime has been as consequential with regard to how business leaders view risk.

Karl Zimmel
Director, Risk Management Services
UniSource Energy Corp.

9/11 is the most significant event of my risk-management career, and it has made a permanent impact to risk management: 1) It has opened our minds to endless loss scenarios during risk identification; 2) It caused special insurance-policy coverage that can’t be completely covered by insurers and requires government reinsurance; 3) Loss-control efforts are significant, starting with barriers outside of various facilities and extending to more sophisticated measures; 4) Security is endless from airports to IT systems.

One could argue several industries have developed to counter the threat of terrorism. It’s a sad sign of the times when terrorism prevention is one of the only industries creating jobs.

Tim East
Director, Corporate Risk Management
The Walt Disney Co.

First, 9/11 has made all of us more aware of the need to consider risks and exposures we’ve never considered before—to evaluate risk more broadly and to include the cascade effect of multiple events occurring at the same time.

Second, the resulting coverage and form dispute following 9/11 made it clear that risk managers, brokers and insurers need to get the terms, language and conditions communicated clearly and acknowledged by all parties. We can never wait for months after a policy is bound to work these out.

Dan Kugler
Assistant Treasurer, Risk Management
Snap-on Inc.

From a risk-manager’s perspective, the events of 9/11 made me expand my view of “what can happen” and the resulting consequences—highlighting the need to expand our view of potential loss and the need to fully support and work closely with local officials in coordination of catastrophic losses.

Sarah Perry
Risk Manager
City of Columbia, Missouri

My sense is coverage issues which arose from the Sept. 11 losses have prompted insurance providers to more carefully spell out coverage inclusions and exclusions—requiring risk managers to pay better attention to policy language.

While the events of Sept. 11 were horrific, I believe it has positively affected the world of risk management by raising the attention of people to the possibilities of loss and the need to have management plans in place should a loss of any magnitude occur. This heightened attention has given risk managers the chance to step forward with expertise in property coverages, preventions programs and mitigation plans.

As a risk manager, one of the biggest changes I experienced following 9/11 was also the willingness of public entities (cities, counties, schools), businesses and not-for-profit organizations to come together to plan a community-wide emergency response—instead of each organization looking at how to handle their own challenges.

Peter ZaffinoPresident and CEOMarsh Inc., a member of Marsh & McLennan Cos.

Greg CasePresident and CEO Aon

Jack Seaquist Assistant Vice President and Terrorism Spokesperson AIR Worldwide

Gary Pearce Vice President, Risk Management Kelly Services

Karl Zimmel Director, Risk Management Services UniSource Energy Corp.

Tim EastDirector, Corporate Risk ManagementThe Walt Disney Co.

Dan KuglerAssistant Treasurer, Risk Management Snap-on Inc.

Sarah PerryRisk ManagerCity of Columbia, Missouri

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