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1. Summary
Although our society has made itself significantly safer
than previous generations with regard to everyday
threats, the potential exists for rare catastrophic events
to overwhelm societal defenses and cause large numbers
of deaths and injuries.The risk from a massive catastrophe
is increasing. Populations are growing rapidly and are
now more geographically concentrated. Cities have
reached unprecedented size and density. Urban centers
are filled with growing numbers of buildings that hold
thousands of people in one structure. And the volume of
social interactions and extent of travel are such that
diseases can spread rapidly through the world’s population.
1.1 September 11: A Worst-case Scenario?
The World Trade Center (WTC) disaster is viewed by
many in the insurance industry as a worst-case scenario
for mass casualties, but in reality there are numerous
events that would generate higher losses for life insurance
and injury-related claims. This report shows that
events capable of causing tens of thousands or even hundreds
of thousands of fatalities are possible in the U.S.,
and that their financial impact can be quantified. Losses
are estimated for several segments of the insurance
industry including workers compensation, individual
life, group life, accidental death and dismemberment
(AD&D), and health insurance.
The analysis considers the risk of mass casualties due
to terrorism, earthquake, industrial accident, and contagious
disease. The risk posed by these perils is illustrated
through a detailed analysis of seven extreme but plausible
scenarios.The city of Chicago was chosen for illustrative
purposes in five of the seven cases, to allow for
extensive local research on human exposure patterns,
the built environment, and insurance penetration. But
Chicago is just one of numerous cities exposed to each
peril. It should not be construed that Chicago is at greater
likelihood of sustaining losses than other locations.
Other natural perils such as hurricanes, tornadoes
and floods can wreak enormous damage on property, but
thanks to modern-day warning systems, they rarely pose
catastrophic risk to human life. Therefore, they are not
considered in this study.
The scenarios selected for this study are extreme, but
not worst-case events. The losses to the insurance industry
in each case could be significantly higher depending
on a number of factors including event magnitude, time
of day, and location. A brief description of each event
follows:
 Earthquake: M7.1 during peak work hours (early afternoon)
in Los Angeles
Earthquake: M6.0 during late night hours in Chicago
Terrorism: synchronized attack deploying 2-ton truck
bombs at three different locations in downtown Chicago
during peak work hours
Terrorism: medium-sized anthrax attack during peak
work hours in downtown Chicago
Terrorism: major anthrax attack during peak work
hours in downtown Chicago
Industrial accident: rail accident causing 90 tons of
chlorine to spill during Chicago morning commute
Infectious disease: nationwide impact of a flu pandemic
resulting from a new strain of the influenza virus
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