Insurers Brace for Disability Claims Tied to Sept. 11
Why is MetLife Inc., a New York-based company with a large number of insurance customers in the World Trade Center, fretting about folks in the heartland? Because it expects to pay disability claims to customers far from ground zero.</br></br>That includes "the worker in Kansas City who is having some nervous disorder just because they watch the war on terror on CNN," says Rob Henrikson, president of MetLife's institutional life-insurance business. MetLife has established $83 million in reserves, largely to cover that type of disability claim, though it won't give a specific breakdown.</br></br>Although the life-insurance industry has taken a relatively light hit from the Sept. 11 terrorist attacks, it nonetheless has been affected by the strikes and their aftermath. Analysts estimate life-insurance companies will have losses of between $3 billion and $6 billion related to Sept. 11, much smaller than the estimated $40 billion to $70 billion in insured losses expected to be paid by property-casualty insurers.</br></br>Of course, the biggest cost for the industry will be paying life-insurance claims for people killed in the attacks. But the industry is also bracing for an increase in disability claims, and not just from workers hurt in downtown Manhattan.</br></br>MetLife, which reported a 33% drop in its net income on Tuesday, said disability claims rise anyway during recessions. "When the economy worsens there tends to be a pickup in incidents," adds Joan Zief, a life-insurance analyst at Goldman Sachs. "The cynic might say that when people are worried about losing their jobs they are more apt to go on disability to maintain an income."