NEW YORK The damage caused by airplanes that crashed into New York's World Trade Center on Tuesday will cost insurers worldwide billions of dollars, in what may be the most expensive man-made insured event ever. "It is safe to assume claims will be in the billions," said Robert Hartwig, chief economist for the Insurance Information Institute in New York, who witnessed the crashes. The total bill, which could take years to establish, is likely to top the $3 billion insurers paid out for the Piper Alpha Oil platform explosion off the coast of Britain in 1988, the most expensive man-made event to date. It will certainly be the most expensive man-made insurance loss in U.S. history, topping the $775 million paid out after the Los Angeles riots of 1992. "You just can't quantify it in terms of cost," said an insurance analyst who asked not to be named. Insurers face claims for the complete destruction of the two World Trade Center towers, which cost $750 million to build in the early 1970s. Insurers will also pick up damage to surrounding buildings and cars, plus the costs of firms relocating and making up their lost income. Firms with operations in the affected area will also make workers compensation claims for employee injuries, and many life insurance and disability policies will be triggered. The airlines that owned the airplanes may also file liability claims against insurers. It is not yet clear who owned the planes that hit the towers, but United Airlines, owned by UAL Corp., and American Airlines, owned by AMR Corp., have both said they lost planes on Tuesday.

Insurers Cover Attacks The property losses are likely to be covered under U.S. insurance polices, which do not usually mention coverage for terrorist acts explicitly, Hartwig told Reuters. Insurers paid out $510 million after militants bombed the World Trade Center in 1993. That attack caused large claims on a dozen or so U.S. insurers, plus syndicates at the Lloyd's of London insurance market. "It's unclear what the insurance arrangements are," Hartwig said, after the latest attack on the World Trade Center. The complex is owned by the port authority of New York and New Jersey, which leased parts of it for 99 years to Silverstein Properties Inc. and Westfield America Inc. in July 2001 for $3.2 billion. None of those organizations could be contacted for comment on insurance coverage. U.S. insurance policies do cover damage from fire, explosions and smoke, Hartwig said, although some firms may have terrorist exclusions, introduced recently in light of attacks on U.S. property over the past few years. Unless insurers have such explicit exclusions, they will have to pay out claims. Many firms worldwide will be hit, as large property and liability policies are usually spread out among insurers and reinsurers to avoid overwhelming claims on any one insurer. That means losses are likely to be shared by U.S. insurers and big-ticket international insurers and reinsurers, which are concentrated in London, continental Europe and Bermuda. Reinsurance companies -- which often cover losses over an agreed amount to protect an insurer from a single massive claim -- are especially likely to be hit with losses.

Reinsurers Likely Losers Munich Re, the world's largest reinsurer, said claims could be "considerable" but would not threaten its financial stability. Swiss Re, the world's no. 2 reinsurer, said it was too early to say what its losses, if any, might be. Shares of European insurers and reinsurers plunged, the worst hit being Munich Re, Swiss Re and German primary insurer Allianz, which declined to comment on the event. Overall, the benchmark Eurotop Insurance Index, which includes Europe's major insurers, fell 13 percent. U.S. insurers contacted by Reuters said it was too early to make comments on possible losses. Bermuda-based insurers could not be reached for comment. No stocks were traded in New York. Canada insurance stocks fell on fears they would be hit with claims. In Britain, Lloyd's, whose member syndicates cover many U.S. and aviation insurance policies, is also likely to see large losses. Terrorist acts are not covered under British insurance polices, but that does not affect the terms of insurance policies covering the United States. Lloyd's, which evacuated its main building in London on Tuesday, declined comment. The damage to the Pentagon near Washington would not lead to insurance claims, Hartwig said, as the U.S. government does not buy commercial insurance to protect its buildings. But businesses within the Pentagon could incur insured losses, he added. Insurers paid out about $125 million for commercial damage after the Oklahoma City bombing in 1995, which came from nearby buildings rather than the Federal building which was destroyed.