Insurance pay-outs could total a crippling £68bn

Fresh estimates that the size of the total insurance bill for last week's terrorist attacks in the US could reach $100bn (£68bn) are expected to reopen fears that the pay-outs could cripple the insurance industry.

Fresh estimates that the size of the total insurance bill for last week's terrorist attacks in the US could reach $100bn (£68bn) are expected to reopen fears that the pay-outs could cripple the insurance industry.

B&W Deloitte, a leading actuarial consultancy, has said that the total costs in insurance claims could reach $50bn to $100bn. Estimates have soared since last Tuesday's attacks as insurance companies and analysts have been able to ascertain the extent of the devastation. Standard & Poor's, the credit rating agency, had previously said that established insurance and reinsurance companies should be able to handle claims as long as they did not exceed $50bn.

If claims do reach these levels, they will dwarf earlier insurance bills. Previously, the largest claim on the insurance industry was the $20bn (£13.6bn) payout after Hurricane Andrew battered the east coast of America in 1992.

The full extent of the terrorsits' damage will not be known for many months. The final bill will include life claims anywhere north of $5bn, property claims of up to $20bn, business interruption claims of at least $3bn and the cost of cleaning up New York and Washington. Grounding thousands of flights last week is estimated to have cost airlines at least $10bn in lost revenues.

United Airlines and American Airlines, the world's two biggest carriers, face billions of dollars of liability claims for their security standards, which allegedly enabled hijackers to board and seize control of the planes. To complicate the situation, United and American are understood to have a cap on liabilities of $1.5bn and $2bn per plane respectively, according to Lloyd's List newspaper, which is not expected to cover the likely compensation claims.

Many of the claims will be made to Lloyd's of London, which is the major insurance market covering world risk. Lloyd's is partly responsible for covering not only United and American Airlines, but also the World Trade Centre's twin towers, which were thought to be insured for $3.2bn.