This is the reasoning of the re-insurers: No one had expected manmade catastrophes to be of the order of magnitude of the 911 losses. Indeed, marine insurers had an idea that $4 billion was just about the largest claim they could ever imagine. That’s until WTC (owned by freeholders Port of NY/NJ) saw the re-insurers raising estimates which aggregated into some $30-40 billion once you added in all the business interruption liabilities, life covers, increased costs of working, aviation hulls, key personnel and all the other interests protected in our highly concentrated postmodern, urban, information-driven lives.
There have been a few studies which have tried to quantify what all these new realities mean for the port industry. It stands to reason that if a device contaminated, say, the port of Hamburg, then instead of the might have expected from flood damage (i. e. 50% of the value of cargo in the port written-off as calculated by a Munich Re study in 1999), the full 100% or ?4 billion might be more accurate. And with ports in the world routinely moving 5, 10 or 15 million TEUs per annum, this leaves an aggregate value at risk in a port at any one time of many hundreds of millions.
And the thing of it is, that pre-911, the largest 40 losses known to world insurers in history all came from natural disasters.
Now the industry can imagine far worse things. But such events are on the whole rather remote. We certainly hope this RACE exclusion never has to be offered up in fear and trembling by a port insurer.
