Assessing the Damage: As claims from the Sept. 11 terrorist attacks stream in, insurers offer checks and empathy. (Cover Story).

By three weeks after the Sept. 11 terrorist attacks that destroyed the World Trade Center, damaged the Pentagon and brought down four airliners, claims processing had become a tedious, open-ended task for insurers, much like the cleanup of the twin towers' rubble.

Claims handlers were settling some property damage and other claims, but they also were waiting with growing frustration for a chance to get into parts of lower Manhattan to assess other claims.

Police officers and National Guard troops still patrolled barricades that closed off a radius of at least three blocks around the World Trade Center site. In some areas, side streets beyond that radius also were closed, as debris removal and the criminal investigation continued at the pile of rubble that was once the twin towers.

A fine gray dust still covered much of Manhattan below 14th Street, as pedestrians-many with face masks- dodged puddles of dirty water and remnants of former police barricades in an effort to get to work. The dust still floating in the air irritated their eyes.

The continuous buzz of police helicopters overhead, along with the green National Guard vehicles parked around the area, gave the impression of a disaster still unfolding.

Limited Access

Catastrophe teams from Travelers Property & Casualty, one of the few insurers able to set up a claims office near the site, were handling claims from two heavily equipped vans on Greenwich Street, about six blocks north of the World Trade Center site, and another van in Battery Park, south of the site.

Ray Stone, coordinator of the Travelers team, said his people had processed many property claims from residents and business owners within the "hot zone"--the area completely destroyed--who had managed to find the vans. But the team had hit something of a lull as it awaited permission to visit other areas where the damage is uncertain.

"The civil authorities have been very understanding, and helpful when they could, but it is still difficult to get into most of those areas," Stone said during the week of Oct. 1.

The Travelers team was lucky--it was able to set up two of its catastrophe-response vehicles in the courtyard of a Salomon Smith Barney building on Greenwich Street. Salomon is a sister company, another subsidiary of Citigroup Inc.

Travelers had about 50 claims handlers on the scene in Manhattan, and it planned to bring in 10 more, in addition to six van drivers, who are all retired claims professionals, Stone said. Travelers has four catastrophe vans, equipped with computer and telecommunications equipment, as well as kitchenettes, to handle claims on the scene. Three of those vans are now in Manhattan.

Most other insurers with claims to process in the area opted to house their catastrophe teams in surrounding areas. While Allstate also has a presence in Battery Park, Chubb Corp. has teams in Westchester County, N.Y., and Florham Park, N.J. Prudential Insurance Company of America and Kemper Insurance Cos. are set up in Hoboken, NJ., and Zurich American Insurance Co. has a field office at the East Side Marriott, at 48th Street and Lexington Avenue in midtown Manhattan.

Jim Howard, manager of the Northeast property operation for Hartford Financial Services Group Inc., leads Hartford's claims-handling operation from a center in Shelton, Conn., dealing with first-party commercial property losses.

As of early October, the Hartford team had serviced all Northeast commercial lines property claims, he said. "I have seven general adjusters that report to me, who handle the high-end claims, typically $50,000 to $100,000 and up. Four of those seven live in the area--in New Jersey, Westchester County, Long Island and Connecticut. They were able to manage claims from their home offices."

Hartford brought in three more claims adjusters from its southern operation, another from upstate New York, one from Boston and one who came out of retirement to help with Sept. 11 claims.

"We've had varying degrees of success getting in there," said Howard of the "hot zone" in lower Manhattan. "It depends on the day, the time and the person who decides if you can get in. Lately, access to the area has been pretty good if you have the proper credentials and you meet the insureds at the barricades. Business owners in the area are known, and you get to the site with a police escort; then you do whatever you need to do as far as photographing the damaged areas and whatnot."

Howard said Hartford considered establishing a catastrophe team office in or near Manhattan, "but we already have our office set up here in Shelton," he said. "We have a training and development room that had about 13 PCs already set up. We basically commandeered the room and turned it into our cat office. We housed adjusters who came in remotely at the residence and tip the street."

When they do need to get into the city, Hartford's adjusters go to one of the shore towns in Connecticut and take a Metro North train to Penn Station in midtown Manhattan. From there, they take either the subway or a cab to the area.

"We have a lot of claims going right now for insureds of ours who were either in the towers or were in surrounding buildings that were destroyed," said Howard. "Our own regional underwriting office was in Building 7, which collapsed. Everyone got out safely.

"We had a number of tenants in the towers. Their coverage is primarily business personal property coverage and business-interruption coverage. In a lot of cases, we've already settled the business personal property claim at the limits that were available. For those businesses with only business personal property coverage, in many cases we were able to write them a check and say, OK, that's it, because they lost everything."

For those with business-interruption coverage, the business-interruption portion of losses is going to keep other claims open for quite some time, said Howard. "We're either trying to recreate the insureds' documents to support their claims, or [we're] working with their accountant or trying to work from another location where they may have saved some documents to help them substantiate their claim."

Psychological Impact

Perhaps the toughest problem for claims handlers dealing with this catastrophe is the psychological toll. In the days following the attacks, most insurers were scrambling to find out whether their own people were safe, while at the same time gearing up their catastrophe-response efforts. Nearly 20 insurance-related companies had offices in the World Trade Center.

Once claims handlers began speaking directly to policyholders, they found they were dealing with terrified, confused victims who were not necessarily worried about recovering money.

Robert S. Taylor, a member of Travelers' catastrophe claims team on Greenwich Street, said what the team does for policyholders is as much a counseling effort as a business effort. "The main thing people look for is guidance," he said. "They ask, 'What do I do now? You guys have been in catastrophes before. What happens now?'

"You have to have empathy; you have to reach out for these people," he said. "Everybody who comes in has a different level of trauma."

Dressed in blue jeans and a T-shirt, Taylor sat at a small table in the Travelers van, typing on a laptop computer as he recounted some of the people he had dealt with in the weeks after Sept. 11. "I met one guy whose family lived in an apartment above a store near the towers," he said. "He had a 4-year-old who said, 'We have to have a family meeting. We have to move to New Jersey, where it's safer.'

"Another family told me they have a 19-month-old who can't watch TV anymore. Every time she sees a replay of the towers falling, she thinks it's happening all over again. When a lot of these people stop in, they already know what coverage they have. They're just looking for someone to talk to."

Travelers, like other insurers in catastrophe situations, often brings in help for just that kind of need.

Bob VandePol of the Crisis Care Network, a crisis-management company that provides what it calls "critical incident stress management," or crisis counseling, said his company has had people in Manhattan and Washington, D.C., since the Sept. 11 attacks, providing counseling to victims and to those who have been trying to help them--including members of insurance company claims teams.

Crisis Care Network, a private company that provides services nationwide, typically handles about 150 incidents a month, ranging from robberies and industrial accidents to mass shootings and terrorist attacks. "Companies and the human resource people are typically concerned about the welfare of their employees," he said. "But what we do is also an effective risk-management technique."

VandePol said quick, effective crisis counseling can have a positive impact on workers' compensation and other claims related to a traumatic event. "When you make counseling available, people tend to recover--and get back to work--more quickly," he said.

On Sept. 11, Crisis Care Network had teams in both Manhattan and Washington, D.C., offering assistance to more than 70 businesses and other groups. A day after the attacks, the company was assisting 106 groups.

Many of Crisis Care Network's clients are property/casualty insurers, including Travelers, said VandePol. In a disaster such as that of Sept. 11, insurers will bring the company in to offer counseling to claimants as they come in to the insurer's field unit.

Far-Reaching Effects

Hartford's Howard foresees the claims-handling process radiating far beyond the hot zone in lower Manhattan in the months to come. "My office handles 11 states in the Northeast," he said. "We have four offices nationwide for commercial property, the others in Chicago, Charlotte and Sacramento. Those other centers are already getting claims.

"One that comes to mind is a steakhouse in Denver International Airport, near Coors Field, where the Colorado Rockies play, and a major mall. With the airport and ball field shut down after the attacks, they lost substantial business, and they're making a claim for that. We have businesses covered in Logan Airport in Boston, LaGuardia and JFK airports in New York, and Newark that have been shut down."

Those, kinds of claims are likely to take a long time to sort out, Howard said. "We're taking it on a case-by-case basis. We have to have all the facts. Obviously, those that suffered direct physical damage can be compensated for business interruption," he said. "For the others, we have to look at the forms--there are several commercial forms--and the language buried within the forms."

Howard said it is tough to cite parallels to Sept. 11's disaster. As far as size is concerned, the Northridge earthquake of 1994 and 1992's Hurricane Andrew come closest. But, as all other insurers said, nothing compares with Sept. 11's convergence of multiple lines of business hit in one shot.

"We'll be feeling this for a long time, and claims generated from this will be coming in for a long time," Howard said. "Down the road, six months from now, when people do their tax returns and such, they're going to look at 2001 and go, 'I had an off year, and it had to be due to the WTC disaster. Let's make a claim and see if Hartford pays for it.' So, I'm sure we're gonna see that coming in for months, if not years."

Ralph Gaona and Phil Newmarker, claims handlers with Travelers' catastrophe team, have been working with the many business claims in and around the hot zone in lower Manhattan. What strikes them is the staggering variety of businesses affected.

"The dynamics of this one are so much different [from past catastrophes]," Gaona said. "There are all kinds of businesses affected--law firms, retail, doctors and dentists, ad agencies. Some of them were displaced and had to go to temporary quarters. Others can't get back to their premises until the authorities permit it."

Newmarker said the lack of access to many buildings creates problems with business-interruption claims. "You have to create a profit/loss scenario based on gross sales records going back 24 months," he said. "In many cases, we can't get to those records."

David Ives, chief executive officer of Niix/Apex Group Holdings, a consulting firm, said the convergence of many lines of insurance business on this one disaster creates a critical mass of claims that will make it very tough for insurers to sort out. "If you just look at workers' compensation claims, you are going to see something like 10,000 claims with one date--Sept. 11," he said. "The scale of it--psychological trauma, respiratory problems--all of that will have to be investigated."

For business-interruption claims, Ives agreed that lost records will be a very big headache for claims adjusters. "The establishment of those losses is going to be very time-intensive," he said.

Liability claims will be another tar pit to slog through, said Ives. Swiss Re's recent lawsuit, filed in U.S. District Court for the Southern District of Manhattan, which challenges the World Trade Center leaseholder's claim that the Sept. 11 catastrophe was two events rather than one, fore-shadows a long legal battle to determine responsibility. In the Swiss Re case, a lot of money rides on the court's ruling--a two-event scenano will cost insurers a possible $7 billion, as opposed to $3.5 billion for one event.

"For many people in this industry, this is going to be the most significant claims event in their careers--we hope," said Ives.

Howard and Stone, like spokespeople for other insurers, declined to give any details about the number of claims processed thus far, or any dollar figures. "It's all too preliminary at this point," said Stone.

The Insurance Services Office Inc.'s Property Claim Services said that as of Nov. 9, property/casualty insurers had reported 18,859 claims totaling $8.4 billion. ISO said 11,383 of those were commercial lines claims, and 7,476 were for personal property. Industry estimates of the total insured damage range from $30 billion to $70 billion. For updated claims information visit www.disasterinformation.org.

Stone said the Travelers teams expect to remain in Manhattan for a long time. To give some indication of how long, he said the company's fourth catastrophe van was still on location in Houston, handling the aftermath of Tropical Storm Allison, which flooded that region in June.

RELATED ARTICLE: N.Y. Insurance Chief Wears Two Hats in Terror Aftermath

Gregory V. Serio, New York's insurance superintendent, saw both of his careers and all of his training and expertise dovetail into one place and one horrifying incident on Sept. 11.

A chief in his local fire department in the Albany area, Serio found himself faced with two sets of duties immediately after two hijacked airliners slammed into the World Trade Center. The state Insurance Department was based within a few blocks of the World Trade Center, so he had to make sure his staff was evacuated. "We had to stabilize our own situation first, make sure everyone was all right and get up and running," Serio said.

As evening fell on a chaotic Sept. 11, Serio turned his attention from the insurance department's operations to those of more immediate concern--search and rescue.

"Like every volunteer fireman or rescue person, you get a certain feeling of helplessness if you're not in there, with your hands in it a little bit," he said "I had a set of gear in my car, so I went down there with the guys from the Urban Search and Rescue Team."

The Urban Search and Rescue Team, described by Serio as a "capital-area team," is made up of 40 to 50 career and volunteer firefighters from the Albany area. The team was created by an executive order from the governor in 1996. The state insurance department sits on the governing council of the team, which is funded by the department with fees collected from insurance companies.

"The insurers essentially paid for the team," Serio said.

The team is run Out of the state's Office of Fire Prevention and Control, also funded by the insurance department and, hence, insurers. "The one identifiable group that derives most of the benefit from the operation of that office is the insurance community and, by extension, their insureds," said Serio. "So with that in mind, we undertook in New York State to actually align the funding requirements for the Office of Fire Prevention and Control, the Urban Search and Rescue Team, the first-line supervisors school that every New York City fire department lieutenant goes through, the Building Codes Council.

"We have really re-created the connection between the insurance community and fire detection and prevention. That's something they used to have a long time ago. They lost it, and we're getting it back in New York," he said.

Serio said the Urban Search and Rescue Team was the first such team on the scene after the collapse of the World Trade Center towers Sept. 11. "They were there that afternoon, from Albany," he said. "They were there days before even the first FEMA (Federal Emergency Management Agency) team came on scene."

On the night of Sept. 12, Serio put in an eight-hour shift with the Urban Search and Rescue Team, between his day-time rounds as insurance superintendent. "I went back periodically after that, just to check on these guys and see how they were doing," he said. "Not only are these guys members of a team that we fund, but they're friends and neighbors from here in the capital region.

"One thing this experience did for me, and I think for other insurance commissioners, is put a human face on everything," said Serio. "It showed us that this isn't just about crunching numbers and delegating fault and risk and responsibility."

Serio said he and about a dozen other state insurance commissioners who since the attacks have toured the site in lower Manhattan, got a vivid education on the "human toll" that such a disaster brings.

Early on, the biggest problem for the team and all the other departments--city fire, police and rescue--was simply the amount and weight of debris, said Serio, adding that it was "very hard" to conduct searches under the facade of the trade center that had collapsed.

"But the worst thing was that, like the members of the city Fire Department, the members of the search and rescue team had a personal stake in this, because the state team was trained by the city fire department," said Serio. Ray Downey, who Serio said was the battalion chief of the special operations battalion, and "who was the guru of this search-and-rescue stuff--he was lost in the trade center collapse."

"I found a parallel there, where these guys came down, looking for their mentor, and using the tools that he gave them, that he instilled in them, to find him and others," Serio added. "We had a parallel over here in the department, where Neil Levin, my predecessor, was also lost. And the tools he gave us that we're now using to get through the insurance challenges--new risk-based financial analysis, doing some stress-testing of companies' financial condition--all things that Neil introduced."

Levin was appointed superintendent of insurance for New York State in 1997 by Gov. George Pataki, serving as the governor's chief adviser on all issues pertaining to life, property/casualty, health insurance and financial privacy. In April 2001, he became executive director of the Port Authority of New York and New Jersey, after being recommended to the post by Pataki and Acting New Jersey Gov. Donald DiFrancesco.

On the morning of Sept. 11, Levin had gone to a meeting on the 106th floor in one of the Twin Towers. He was reportedly last seen on the 106th floor helping people get down a staircase.

Downey, who friends say planned to retire next year at age 64, was captain of the busiest rescue squad in Brooklyn for many years, according to Newsday, a New York newspaper. After that, Downey helped pioneer a national network of eight search and rescue teams under the Federal Emergency Management Agency. Many of the members of the eight FEMA teams who later searched for him in the World Trade Center nibble were his trainees.

"That may have been the biggest single challenge, in that there was so much of a personal stake for everybody working there in the pile," Serio said.

The creation of the Urban Search and Rescue Team in 1996 was inspired in part by the 1994 bombing of a federal building in Oklahoma City, and driven by Pataki, whose own father was a volunteer firefighter, said Serio. "The Oklahoma City bombing raised the question, 'Are we prepared to respond to a large-scale incident?'" he said.

In the wake of the disaster, insurance companies had gone far beyond even their previous reputations for responding well to disasters in New York, Serio said. "I think the companies had done an outstanding job of making themselves accessible, of getting close to those affected, and expediting claims to a degree we've never seen before," he said. "The industry has responded in a fashion that brings pride, not only for the industry but for the regulatory community as well."

Serio added that the insurance department's Insurance Emergency Operations Center, created in May 2001, had never been tested in an actual catastrophe before. "Unfortunately, something the size and magnitude of the World Trade Center disaster ended up being its first test, and I must say, it ended up being an unqualified success."

One of the functions of the Emergency Operations Center, said Serio, is to expedite the access of insurance company officials to the disaster area. "This is not a hurricane or a tornado, but an active fire scene as well as an active crime scene," said Serio. "But we were able to get insurance adjusters in for a walking tour of the area within two weeks of the event. So they were able to get some idea of the losses they were facing."

Another critical task handled by the operations center, said Serio, was to issue temporary claims adjuster licenses to insurance company personnel coming in from other states. "This is a critical function for companies in these Situations," he said. "We moved 400 temporary licenses electronically or online within hours, instead of days."

Serio, who toured "ground zero" at the trade center with 11 other insurance commissioners Oct. 25, said the tour concluded at Battery Park, just south of ground zero and within the boundaries that are off limits to anyone who doesn't live or work within the area. "There we came upon a Travelers [Property & Casualty] van and an Allstate van, working within that 'warm zone' near the disaster site," he said. "We actually got them into places that regular pedestrian and motor traffic can't get into.

"So I think the insurers have been able to bring their operations up to a more advanced level at this point than in the past," he said. "Before the operations center, and before we put other methods in place to expedite the process, insurers would have still been in a very preliminary stage at this point in their efforts to expedite the claims process."