Insurers Could Pay $35 Bln In Y2K Costsgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Insurers Could Pay $35 Bln In Y2K Costs
Click on our sponsors! Updated 6:58 AM ET June 21, 1999 NEW YORK (Reuters) - Insurers could pay $15 billion to $35 billion for claims and legal costs related to year-2000 computer problems, potentially ranking the expenditures second only in size to asbestos and pollution-cleanup claims, the Wall Street Journal reported. The estimate of insurers' Y2K burden comes from Milliman & Robertson Inc., an actuarial firm that has made past estimates for asbestos and environmental claims.
It is one of the first attempts to quantify the cost of an expected onslaught of claims from corporate insurance clients facing business interruptions or lawsuits over problems emanating from computers' inability to function properly after the year 2000 begins, the Journal reported.
Wall Street stock analysts said a $35 billion hit probably wouldn't be calamitous to the industry as a whole; it would eat up about 10 percent of the industry's surplus, the paper said.
But, at the $35 billion level, many insurers would have to devote as much as two years of earnings to cover claims stemming from the "millennium bug."
And the losses could topple some small, struggling insurers and put others on the auction block, the paper said.
The Milliman & Robertson study, included in the June issue of the insurance-industry magazine Best's Review, projects that the largest group of expenditures, $5 to $10 billion, will involve insurers battling their own customers in court over what's covered under a policy, the Journal said.
The next-largest group of payments, $4 billion to $8 billion, will go toward actually paying "general liability" claims, the study projects.
-- Arlin H. Adams (firstname.lastname@example.org), June 21, 1999
I have a prediction for you too, insurance claims will exceed 35 billion per state!
-- BiGG (email@example.com), June 21, 1999.