Indeed, had a nuclear device been available to Osama bin Laden, the loss could have bankrupted most of the industry, Berkshire very much included. Given that kind of horrendous, but not impossible, nuclear scenario, insured losses could have been $1 tn, an amount that exceeds the net worth of all property-casualty insurers worldwide.
The terrorist attacks of September 11, 2001 produced insured losses larger than any natural or man-made event in history. Total life and non-life insurance losses reached about $35 bn. The losses sustained by the insurance industry were unparalleled in every respect. The claim settlements represented not only property coverage, but also life insurance, business interruption, health, disability and workers compensation lines. Aviation and liability insurers also suffered record losses emanating from a single event. The sheer size of the loss shocked everyone especially coming from an entirely unanticipated peril for which no premium had been collected. The attacks killed over 3,000 people from over 90 countries. The insured losses were shared by nearly 150 insurers and reinsurers all over the world.
It is not that prior to September 11, 2001 there were no terrorist attacks in the US. There was an attack on the World Trade Center (WTC) in 1993 and the Oklahoma City was bombed in 1995. The losses from these acts of terrorism had been small. Therefore, insurers in the US did not view terrorism -either international or domestic as a risk that ought to be considered when pricing their commercial insurance policies. Before the attack on the WTC, terrorism coverage in the US was an unnamed peril covered in most standard all-risk commercial and homeowners' policies.
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