LONDON Oct 4 The London insurance market plans
to test its response this month to a major catastrophe on the
scale of the 9/11 attacks, the chairman of insurer Hiscox
said on Tuesday.
While insurers have coped with regular hurricanes,
earthquakes and terrorist attacks in recent years, the industry
feels there is a need to test how it would react to a disaster
of the magnitude of the 2001 attacks on U.S. cities that killed
nearly 3,000 people.
After being given test scenarios, insurers and brokers will
hold meetings over two weeks starting Oct. 30 to plan how they
would respond to customers and check issues such as the impact
of huge claims on their capital positions, Hiscox Chairman Rob
Childs told Reuters.
He did not specify whether the exercise would involve a
natural disaster or an attack.
London is a leading centre for insuring businesses and
properties against catastrophes, mainly through the Lloyd's of
Although there have been devastating natural disasters,
including Hurricane Katrina in 2005, Childs said the 9/11
attacks had a particularly big impact due both to insurance
losses of $40 billion and the fear they generated.
"How one deals with a major catastrophic event is moving out
of folk memory," he said.
"The people who did it before have forgotten what they did,
the people making the decisions now were probably still in
school. We need to run through a process and flush out any
Hiscox is spearheading the simulation, which will involve
around 10 insurers, along with brokers, ratings agency S&P
Global and Lloyd's of London.
The Bank of England's Prudential Regulation Authority and
the Financial Conduct Authority, which together regulate the
British insurance industry, will act as observers.
Consultants McKinsey are running the tests, and will
publish results early next year, Childs said.
(Reporting by Carolyn Cohn; Editing by Adrian Croft)