Before the Sept. 11 terrorist attacks, Lowe Enterprises Inc., a Los Angeles based property management company, was facing a 28 percent hike in its property insurance. Following the attacks, which could cost the insurance industry as much as $70 billion, all bets were off.

Some of the company's carriers declined to offer coverage, forcing Lowe to scramble to find new ones to insure its vast portfolio, which include trophy properties such as the Hotel Del Coronado and which has a total insured value of $3.2 billion. Other carriers demanded terrorist exclusions, or rate hikes.

In the end, Lowe was forced to accept another 7 percent increase in its premiums as well as substantially higher deductibles from its 21 carriers. Still, Stacy Stevens, the company's risk manager, considers herself lucky considering the experience of other property managers who had insurance renewal dates soon after the attacks.

"I have heard 50 to 100 percent increases in premiums," said Stevens.

With the insurance industry now expecting the terrorist attacks on the World Trade Center and the Pentagon to easily eclipse Hurricane Andrew as the single most costly event in industry history, it's clear that businesses in Los Angeles and across the country will bear their share of the costs.

Estimates skyrocket

Initial estimates of the Sept. 11 payout were as low as $14 billion, but those estimates have been steadily rising.

American International Group Inc. the nation's largest insurer, estimated its losses at $500 million. Zurich Financial Services, parent of L.A.-based Farmers Insurance Group, has pegged losses at up to $400 million.

While the carriers will not comment on how the losses may affect their pricing, reports by firms such as Tillinghast-Towers Perrin expect the property and business interruption markets to be hit hard as will aviation, workers compensation and liability.

And local insurance brokers say that in recent weeks clients renewing commercial insurance, especially property coverage, have seen substantial premium hikes, as much as 100 percent or more.

That's not just because carriers are attempting to cover their losses or because of a contraction in capacity, but because of a higher risk related to terrorism and ample evidence that complete high-rises can be brought down.

"We still don't know what all the outcome is going to be. There's a lot of speculation," said Kris Davis, managing director at Marsh Risk & Insurance Services, a division of Marsh & McLennan Cos., the world's largest insurance broker. "But before (the carriers) thought if you had a fire or some other event, maybe there was 25 percent exposure. Exposures are now being viewed at 100 percent."

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