Twenty-Five Years After 9/11: A Lasting Insurance Legacy
After 9/11
Insurance
Legacy
hil Miller, FCAS, always called home when he finished his morning commute to lower Manhattan. This time he would report something extraordinary but troubling. An airplane had smashed into the building next to his own.
But for the insurance sector — and brokers in particular — September 11, 2001 was a day of reckoning.
He said he would come home soon.
That morning, 1,300 miles away in New Orleans, actuaries gathered in a ballroom at the Fairmont Hotel for day two of the Casualty Loss Reserve Seminar. During a session on “Issues and Trends with Asbestos,” moderator Mike Angelina, FCAS, announced to attendees that a plane had hit the World Trade Center.
Many people assumed it was a tiny plane, perhaps a pilot who had lost control after a heart attack. That was unusual but not unprecedented. A B-25 had struck the Empire State Building in 1945; 14 had died.
Angelina gave his talk, followed by Kevin Madigan, ACAS, who spoke for about 25 minutes.
After that, normality went on hiatus.
CAS employee Emily Monacell came onstage to announce that the rest of the seminar was canceled. The New Orleans airport was closed. Anyone who had checked out of the hotel would be able to check back in.
Madigan remembers:
We were all very confused. Someone in the audience who apparently had a BlackBerry or something similar (this [being] pre-iPhone era) said, “tell them what’s going on,” at which time the staff member burst into tears. She regained composure, or tried to, and said, “America is under attack!”
The day, of course, was September 11, 2001. Things that had been stable were no longer. Things happened that shouldn’t have. Tall buildings shouldn’t crumble in minutes, but they did. Presidents shouldn’t have to hopscotch across the country to find safety, but ours did. Governments should be able to protect us from the worst, but ours had not.
People who go to the office in the morning should work and then leave, but that day thousands didn’t.
This is a story about people wanting to go home.
It is also a story about insurance. The P&C industry paid around $40 billion in 9/11 claims. At the time, it was the worst-insured catastrophe. It remains the worst man-made catastrophe.
It remains the worst catastrophe for workers compensation, business interruption, and aviation insurance, too, despite an enormous compensation program that relieved airlines and their insurers of billions of dollars in liability.
It triggered an extraordinary lawsuit that changed how insurers operate.
It created a new coverage — terrorism insurance — and a federal backstop to nurture a marketplace for the coverage.
9/11 changed everything.
For Miller, leaving the World Trade Center was taking far longer than it took to get in. Just a few minutes earlier, a series of elevators had whisked him to the 103rd floor. Now he was trudging down a staircase with some Aon colleagues.
He wasn’t supposed to be at work that day. He had planned to work from his family vacation cabin in the Poconos, a privilege earned after more than 30 years as a fellow and insurance executive. Miller had risen to a senior vice president at Insurance Services Office before moving to Aon in the mid-1990s.
But he had forgotten a few things at work, so he’d ferried over from Staten Island and most likely walked the final mile. And now he was making his way down from Aon’s 103rd floor offices with maybe a half-dozen colleagues.
Even though Miller’s building, the South Tower, had been declared secure, most people on the higher floors were leaving. Overcrowded stairwells stalled everyone’s descent. Phil’s group decided to switch to the elevators.
[We] stopped … on the 78th floor — the sky lobby, where all the elevators met. … Then Phil left. … Just after he walked away, there was a tremendous explosion. The marble walls crumbled. All the lights went out. I was thrown across the lobby. This is the end, I thought. I should’ve walked down.1
The second plane had struck the South Tower, its left wing plunging through the sky lobby. Wein found one colleague dead and one with his legs broken. She was able to walk down to safety.
She didn’t know what happened to Phil.
The actuaries in New Orleans felt no immediate danger, but they were surrounded by uncertainty and turmoil.
Madigan:
Some of the attendees at my session left, but most just sat there shocked. Those who had smartphones or laptops started using them to find out what was going on.
Doug Oliver, FCAS, had been scheduled to speak after Madigan.
Madigan:
[Oliver] stood up and said something to the effect of “you heard her, you can leave or stay. You can’t fly anywhere, but I guess you could go get drunk on Bourbon Street. So, you may as well stay and listen to me.” And then he proceeded with his presentation, which ran about 20 minutes long.
In his defense, there was nothing else going on and he did tell everyone to leave if they wanted. Might as well talk about reserving to pass the time. Some did slowly trickle out, but most people stayed till the end. I think we were all in shock.
Most of the 583 attendees eventually made their way to the International Ballroom on the mezzanine level. It was the natural gathering point; breakfast, lunch, and session breaks were all held there.
Madigan:
She blurted out “I don’t know if any of my colleagues are still alive” and kept sobbing … Lots of people from metro New York were furiously scrambling to find out if their loved ones were affected … CAS staff were all trying to figure out if their loved ones and colleagues in the D.C. area were safe. It was scary. I and many others were trying to make sure our loved ones far from the events knew we were OK.
Attendee Richard Carris, then a claims expert for Ernst & Young, was at the seminar to talk about the new way the National Association of Insurance Commissioners wanted claim expenses to be classified — DCC and A&O replacing ALAE and ULAE. As he took in the tumult in the New Orleans ballroom, he also thought about the insurance behind the chaos in New York.
Carris:
All were stunned, and we realized … this was not an accident. Being a claims dude, I recall very well making a comment and question: … Was this going to be one or two occurrences in the world of property insurance?
The Twin Towers were separate buildings but part of a single complex — six buildings on an enormous plaza. Everything was obliterated when the towers fell.2
A public body, the Port Authority of New York and New Jersey, built the complex in the early 1970s. In summer 2001, the Port Authority leased the towers and two other plaza buildings to a private company, Silverstein Properties. Silverstein’s team assembled $3.55 billion of coverage from 22 insurers.
Less than six months later, the towers had fallen. The plaza was destroyed.
One claim or two? There were two attacks, but the attacks were coordinated. And two buildings were struck, but the buildings were part of the same complex.
Carris:
Of course, two occurrences would mean double the limit of insurance.
Further complicating matters, there was insurance but no insurance policy. Negotiations for the Silverstein Properties lease had been protracted. Coverage was bound, but final wording hadn’t been set.
Two forms were circulating. One defined “occurrence” specifically. The other defined it broadly or lacked any definition.3 Six years and a series of lawsuits later, Silverstein Properties would get $4.55 billion — $1 billion above the single-occurrence limit.4
Carris:
That day, somehow Joseph Treaster from The New York Times was able to get through to me on my cellphone — he wanted to quote me and, specifically, if I thought insurers would be invoking the war exclusion in property insurance.
It looked like war — coordinated attacks on America’s financial and political center. The next day, President George W. Bush said they “were more than acts of terror. They were acts of war.”
Carris demurred.
Robert Hartwig, then chief economist at the Insurance Information Institute (Triple-I), got similar calls, even as he was watching the detritus of the buildings billow skyward from his office three blocks away.
Hartwig:
So I made a judgment call that that the war exclusion would not apply here. First of all, there had been no declaration of war. Second of all, the industry had paid in past terrorist events. [Terrorists had blown up a truck in a garage beneath the World Trade Center in 1993.]
The next day’s Wall Street Journal quoted him: “It’s not clear if some or all of the insurers had such exclusions.”6
In New Orleans, Pat Teufel, FCAS, had planned to talk about a new Standard of Practice (Property/Casualty Loss and Loss Adjustment Expense Reserves), but she never got the chance.
I mean … disbelief … How can this be happening? … Everybody at the conference was gathered in that room … fixated on the screen.
Certainly after the second plane went down, my first thought was … I’ve got to call my husband [in Connecticut, where he taught] and tell him I’m OK.
He taught fifth grade [in West Hartford, Connecticut], and you know, you don’t interrupt a teacher in a classroom. So I called the office. And I said to just get him a message that I’m OK.
He got the note, and they didn’t have anything running in the classroom, needless to say … So he didn’t know. He’s like, what on earth is she sending me this message for?
And the office staff said, well, there’s a lot happening.
But … then for me, the meeting turned into: … How do we get back to our loved ones?
Most attendees had flown to New Orleans, but the FAA grounded all flights nationwide at 9:26 a.m. It wasn’t clear when they would resume. No one wanted to hop onto what could become a hijacked missile.
Teufel:
No one knew whether it was a one-and-done event or whether there would be [more] attacks. The airlines were certainly not running. I wasn’t going to get on a plane for sure.
Trying to leave New Orleans proved difficult, Teufel said. “You called any [car] rental company and they weren’t renting.” People lucky enough to have rented a car before September 11 just drove it home.
“The rental cars that were out,” she said, “were not coming back.”
People could wait a day or two for a car, or they could get creative.
Peter Royek, ACAS (“Introduction to Reinsurance Reserving”), was in New Orleans with seven other people: his parents, wife, two children, and two close British friends. He visited a rental desk at a nearby Marriott, with no luck.
Walking through the Fairmont lobby, he heard that someone had chartered a bus and two drivers to Philadelphia, which was not terribly far from his home in Rockaway Township, New Jersey.
He snagged the final seats, rounded up his family and friends (the kids were at the pool), and scurried onto the bus.
Carris, the claims guy, walked a mile to Amtrak’s Union Passenger Terminal. The only train to his home in New York, the Crescent, had left at 7 a.m. Wednesday’s train was canceled; Thursday’s was booked.
But the claims guy was also a trains guy. He knew that Amtrak always held an accessible sleeper compartment but would sell it to anyone if it was still available a day or so before. That’s how he got home.
Madigan snagged a rental car the next day:
I started calling all the local rental car places in New Orleans. The national numbers were all telling me that officially none of the locations were operating. The person I spoke to on the national Avis line said she had heard some locations were open, but you had to call them directly. I managed to get a hold of someone at the Avis counter at the New Orleans airport around lunchtime on the 12th and was able to reserve [a Chevy Cavalier].
Teufel rode home in a rental car with three other people. “It wasn’t me who organized it,” she said. “As I recall, there were four of us” traveling in “a typical sedan … We were just looking to get out.”
Trips home are memorable because how little of them is remembered. After the torrent of events Tuesday morning, little remains vivid in the minds of the actuaries who were among the hundreds of thousands of people pulsing along superhighways in America’s darkest night, a reverse white-collar diaspora.
Madigan doesn’t recall stopping for dinner, “though surely we did.”
Teufel remembered eating at a Waffle House, maybe, but not the sequence of highways that got her back to Connecticut.
Stopping for gas in Knoxville, Tennessee; in Roanoke, Virginia. Getting dropped off at the Quaker Bridge Mall in Lawrenceville, New Jersey.
They caught a stretch limo home.
“Considering the events of that day,” Royek said, “our journey was an inconvenience, not a tragedy.”
By the evening of September 11, Phil Miller’s daughter, Sheryl Miller Bechor, was riding north from Florida on Interstate 95, back to her childhood home on Staten Island.
She was on the road with family — a cousin, her husband, and her children, both under age 3. Her dad loved to play with kids, but he had only been able to spend a little time with them.
Sheryl had a cellphone and free minutes — someone at the phone company understood her plight. She was calling morgues, hospitals, anyone who might know what had happened to her father. Despite the destruction that TV had shown that day, there were stories of miraculous survivors — precious few but often told. Could her father have been one of those?
The van stopped in North Carolina for the night. Sheryl remembers how helpful people were. She remembers driving beneath overpasses, seeing people holding American flags.
The group arrived at the Staten Island homestead; there were no more hospitals to call, no more morgues to check.
Sheryl gave a DNA sample for the medical examiner’s office, a cheek swab.
Financial losses from 9/11 were enormous. The attacks produced catastrophic losses on lines of business that had never had one before. The largest insured catastrophe up to then had been $16 billion for Hurricane Andrew in 1992.
Writing a year later, Triple-I economist Hartwig cited 9/11 losses at $40 billion, including $2.7 billion in life insurance claims (see Figure 1).7
Managing insurance claims often involves a search for proximate cause, the “but for” moment that made what happened unavoidable, if not inevitable.
It is hard not to consider the aviation industry as the proximate cause of 9/11. In 2001, the airlines were responsible for passenger screening, “the most important and obvious layer of security.”8
From the 9/11 Commission report:
As the Inspector General of the Department of Transportation told us, there were great pressures from the air carriers to control security costs and to “limit the impact of security requirements on aviation operations.” A longtime FAA security official described the air carriers’ approach to security regulation as “decry, deny and delay.”
That contention was never tested in court. Within two weeks, Congress developed an $18 billion bailout that capped carrier liability for 9/11 and future attacks. In its place, Congress created the September 11 Victim Compensation Fund, which distributed $7 billion to victims and their families.9
Even so, U.S. P&C insurers lost $7 billion that year, the first year the industry lost money since at least 1975. Industry underwriting losses topped $50 billion.10
Madigan:
In the fall of 2001, the January 1, 2002, renewal season was crazy as there was a lot of uncertainty about reinsurance capacity. I spent the four weeks between Thanksgiving and Christmas pricing renewals for a client that was inundated with submissions. This was indirectly related to 9/11, as the specific work was not related to the attacks, but the volume of work was driven by all the market uncertainty created by the attacks.
With higher rates and less capital to support risks, insurers could be selective. The single exposure no one wanted to write was terrorism.
Before 9/11, the largest insured terrorism loss had been $900 million, the 1993 bombing of the NatWest Tower in London.12
The 9/11 attacks were unprecedented, sudden, and devastating. No one knew whether further attacks might be looming.
The biggest fear was a dirty bomb: explosives encased in radioactive material that would kill hundreds, maybe thousands, and render the surrounding area uninhabitable for years, a Chernobyl-like radioactive zone radiating out from, say, Times Square.
By 2002, 45 states and the District of Columbia allowed insurers to exclude terrorism from most P&C coverage. Insurers excluded terrorism everywhere they could. So-called trophy properties — sports arenas and landmarks that seemed to invite the evil terroristic eye — couldn’t find coverage.
But some coverages couldn’t exclude terrorism. Workers compensation, of course, covers injuries arising out of and occurring in the course of employment, regardless of cause.
This patchwork of problems found a political solution. Congress passed the Terrorism Risk Insurance Act (TRIA). It required insurers to offer coverage but created a complex government backstop to cover extreme events. TRIA was temporary, but it has been regularly renewed. The latest version is due to expire at the end of 2027, but legislation to renew has been filed in Congress.13
Two major insurance brokerages operated from the World Trade Center on 9/11. Aon lost 176 employees that day. Guy Carpenter lost 23, counted among the 358 Marsh McLennan employees and consultants who perished.
Phil Miller is believed to be the only FCAS who died. There was a memorial service but no funeral, because there were no remains.
The calls came sporadically to Bechor’s phone. The medical examiner would call after each new DNA match. It happened every few months for 10 years. Finally, his daughter told them to stop calling; it was too hard to relive.
Call again, she said, when they find his wallet or his wedding ring.
Something to remember him by.
- Judy Wein and Cheryl Rhodes, “The Survivor from the 103rd Floor,” Ladies’ Home Journal (New York, United States), December 2001.
- World Trade Center 7 was a separate commercial development across the street. It collapsed around 5 p.m. EDT.
- Meg Green, “Three Insurers Win Ruling That WTC Disaster Was One Event,” Best News & Research Service (Oldwick, NJ), September 25, 2002, https://news.ambest.com/newscontent.aspx?refnum=52954&altsrc=174.
- Rodd Zolkos, “‘Wilprop’ Case Changes the Industry; WTC Occurrence Dispute Teaches Some Tough Lessons,” Business Insurance, September 12, 2011.
- “Insurance Circular Letter No. 20 (2008): All Insurers, Reinsurers and Insurance Producers | Department of Financial Services,” accessed May 2, 2026, https://www.dfs.ny.gov/industry_guidance/circular_letters/cl2008_20.
- Christopher Oster, et al., “Insurers May See Biggest Liability Ever for Losses,” Wall Street Journal (New York), September 12, 2001.
- Robert P. Hartwig, “The Impact of the September 11 Attacks on the American Insurance Industry,” in Patrick M. Liedtke and Chrisophe Courbage, eds., Insurance and September 11: One Year After (The Geneva Association, 2002), https://www.genevaassociation.org/sites/default/files/publications-document-type/pdf_public/sys_insurance-and-september-11-one-year-after.pdf. Estimates vary considerably; careful readers will notice that in the chart the dollar breakdown from the destruction of the Twin Towers is $1 billion too low.
- National Commission on Terrorist Attacks, The 9/11 Commission Report (2004), p. 101 https://9-11commission.gov/report/.
- Elaine McArdle, “Kenneth R. Feinberg: ‘I’m Very Proud of What We Did,’” Harvard Law Today, September 9, 2021, https://hls.harvard.edu/today/kenneth-r-feinberg-im-very-proud-of-what-we-did/.
- R. Glenn Hubbard, et al., “The Economic Effects of Federal Participation in Terrorism Risk,” Risk Management and Insurance Review 8, no. 2 (2005): 177–209.
- Judy Greenwald, “Hard Market Likely to Last through 2003,” Business Insurance, September 1, 2002, https://www.businessinsurance.com/hard-market-likely-to-last-through-2003/.
- R. Glenn Hubbard, et al., “The Economic Effects of Federal Participation in Terrorism Risk.”
- Congress Senate, “S. 4395 (IS) – Terrorism Risk Insurance Program Reauthorization Act of 2026,” Government, Govinfo.Gov, U.S. Government Publishing Office, April 27, 2026, https://www.govinfo.gov/app/details/BILLS-119s4395is.
Chad Hemenway, “Update: House Committee Advances Bill to Extend Federal Terrorism Backstop,” Insurance Journal, January 22, 2026, https://www.insurancejournal.com/news/national/2026/01/22/855197.htm.