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Topic 1. Introduction

Topic 1. Introduction. Bus 200 Introduction to Risk Management and Insurance Jin Park. Overview. September 11, 2001 Who suffered a loss? Who’s liable? Hurricane Isabel Similarities and dissimilarities between them. September 11, 2001. Who suffered a loss from the attack?

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Topic 1. Introduction

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  1. Topic 1. Introduction Bus 200 Introduction to Risk Management and Insurance Jin Park

  2. Overview • September 11, 2001 • Who suffered a loss? • Who’s liable? • Hurricane Isabel • Similarities and dissimilarities between them.

  3. September 11, 2001 • Who suffered a loss from the attack? • Owner of the WTC • Tenants of the WTC • Survivors • Business owners around the WTC and in NY City • NY City and US as a whole • Insurance Companies – Primary insurers and reinsurers • Other economies in the world

  4. Globalization

  5. September 11, 2001 • Why did insurance companies suffer? • What happen to real estate industry and why? • Terrorism Risk Insurance Act of 2002 • November 26, 2002 to December 31, 2005 • Certified Act of Terrorism - the Secretary of the Treasury must certify

  6. Reinsurance • Private reinsurers are not willing to provide coverage due to the catastrophic nature of terrorism. • In 2001, Swiss Re posted a loss for the first time in its history. • Pooling among insurers.

  7. Top 10 Catastrophic Property Losses

  8. Liability Issues • Owners of the property • Employers • Airline companies • Airport authority • U.S. Government • Osama Bin Laden, Al Qaida ?

  9. Hurricane Isabel • Insured loss is about • $600M from wind-related losses • $1B from flood-related losses • Similarities and Dissimilarities

  10. Next • Risk and Terminology • Chapter 1, pp. 10 – 13, 18 – 20 • Risk Management: Understanding the Process, Contingency Planning and Management, May 2000 • What’s Your Risk Metric?, CFO.com, July 12, 2001. • Enterprise Risk Management at Wal-Mart, Risk Management, December 2003. • Changing times – Changing demand, Rural Communications, May-June, 1999.

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