Due to the terrorist attacks of Sept. 11 and the potential for other incidents, insurers are increasing rates, asking for higher premiums and making terrorism coverage difficult to obtain, said John Fitzgerald, an insurance expert.

"Sticker shock is very common because about 70 percent of policies are up for renewal right now," Fitzgerald said. "Premiums are skyrocketing for just about every company. It is very costly for businesses working in areas that may encounter a terrorist attack, such as an airport in a major city."

Higher premiums will be accompanied by cutbacks in coverage and higher deductibles, Fitzgerald said.

"O'Hare International Airport in Chicago is the most extreme case we've seen," he said. "They were paying $125,000 in premiums for $750 million in coverage, but after Sept. 11 that escalated to $7 million for $150 million.

"Other industries will face a problem in even getting terrorism coverage. If you make munitions or do business in the Middle East, those premiums are going to seem outlandish."

The escalation in insurance costs comes after a decade of artificially low premiums due to intense competition among insurers, who were making large investment gains on premiums during the stock market's heydey.

Fitzgerald believes those days are long gone because claims from the Sept. 11 attacks may reach $50 billion and the average increase for coverage is expected to jump anywhere from 20 to 400 percent in 2002.

"The insurance industry is very conservative and those executives are just waiting for another attack," Fitzgerald said. "They may not want to offer terrorism coverage unless forced to by the federal government. The government may have to step in to make sure that occurs."

By Marc Ransford, Media Relations Manager

(NOTE TO EDITORS: For more information, contact Fitzgerald at jfitzgerald@bsu.eduor (765) 285-8192.)