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."

Hikes already in works

John Genovese, chief executive of Willis Risk and Insurance Services of Los Angeles, warned that it's difficult to distinguish between rate hikes related to the terrorist attacks and those already in the works given the tightness in the commercial insurance market.

"We are seeing rate increases, but it was picking up traction already," he said.

That was the case with Quality Parking, an Encino-based parking company with 55 lots, garages and other operations that renewed its accident, general liability, umbrella and other insurance coverage in August.

Its original carrier refused to underwrite its insurance, while another offered coverage at triple the premium the company was accustomed to paying. It finally signed up with Fireman's Fund, and owner Ben Akbary was thankful for "only" a 100 percent rate hike.

"I know some parking companies that couldn't even get insurance," said Akbary.

Robert Hartwig, chief economist for the Insurance Information Institute, a property and casualty insurer trade association, said if the commercial market was tough already, expect it to get only tougher.

"As an industry that specifically deals in the assumption of risk, we have to reevaluate the likelihood of sustaining losses in the future, and there is urgency to this," Hartwig said. "Perhaps some of the most dangerous periods lie just immediately ahead of us."

That perspective is understood at The Cheesecake Factory, the Calabasas-based restaurant chain, which has a Nov. 1 renewal date on its property and other insurance.

The company currently pays $600,000 in premiums for property coverage, with a low $20,000 deductible and high $25 million per occurrence limit. It claims to have a stellar safety record, but is being asked for "tons of loss runs" and other information before it can get a quote, said Kurt Leisure, the company's risk services director.

"They are just being sticklers because of what happened in New York," Leisure said. "They are looking at every dollar."

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