Insurers in Britain and America were yesterday forming a consensus that last Tuesday's attacks on the World Trade Centre and Pentagon constituted an act of terrorism – an eventuality which is much more widely insured for than an outbreak of war.
Chubb, one of America's largest insurers, and Swiss Re, the global reinsurer, became the first insurance companies to confirm that they did not view the disaster as an act of war.
The statement by the two companies – which are both substantially exposed to claims – was significant because property insurance in the US includes cover against terrorist acts but excludes war insurance.
Property insurance will be drawn on, along with aviation cover, for pay outs for the destruction of the World Trade Centre, and the suspected damage to surrounding buildings which are still standing.
UK insurers also indicated that the events came into the category of terrorism. Cox Insurance, an underwriter of Lloyd's of London, said it was "too early to tell" whether the attacks would count as the beginning of a war, but Lloyd's said none of its members had so far applied for an exclusion to pay out on these grounds.
One insurance lawyer in the City said: "Insurers have a duty to other policyholders to make sure they do not pay out claims when they are not liable, but trying to get out of claims would be a public relations nightmare and the US courts are going to bend over backwards to make sure US citizens receive claims."
Yet the expectation is that many aspects of the tragedy will end up in court. One key area will be whether the attacks were one event or a series of events. If they are seen as one event, insurance claims will be capped by limits written into policies.
Disputes are also expected over how far compensation for loss of business should stretch, with many predicting that events like the cancellation of the Ryder Cup would create claims as well as businesses which suspended operations in New York.
With issues surrounding liability still unclear, many underwriters including those at Lloyd's of London were yesterday writing no new business. Lloyd's itself gave the first indication that it was confident it would be able to cope with the expected influx of claims.