The images of the Twin Towers, the Pentagon and a farmer's field in Pennsylvania were brutally seared into America's collective consciousness on Sept. 11, 2001, creating psychic ripples that have yet to recede.

Not to mention financial and economic ramifications.

Of those, the effect of the Al Qaida terrorist attacks on insurance have been among the most severe and, for many Americans, the most worrisome.

Within days of the attacks, concerns were being widely expressed that insurance companies might try to wiggle out of covering the gargantuan losses incurred on 9/11 by claiming the attacks were exempted "acts of war."

Fear of that possibility turned out to be groundless. Insurance companies chose not to duck their responsibilities. A little more than a year after 9/11, it would become legally impossible in any case, after Congress passed the Terror Bill which, among other things, banned the "terrorist exclusion," a widely-used clause by which insurance companies had exempted coverage for acts of terrorism from foreign sources.

The insurance jitters didn't stop there.

Within months of 9/11, the Jewish community was agonizing over another potential result: significantly higher insurance premiums for Jewish institutions.

That fear was well summarized in an August, 2002 memorandum from ADL national director Abraham Foxman, who wrote of "a dramatic increase in premiums that Jewish community institutions ­ synagogues, community centers and day schools -- are paying for property insurance.

"In the aftermath of the September 11 terrorist attack, many non-profit organizations have also been dramatically impacted by increased premiums, but we are also concerned that Jewish community institutions might be unfairly singled out for increased risk of a terrorist attack."

Foxman called upon the US Congress to examine whether insurance companies are "using the currently heightened state of concern to unfairly eliminate coverage and increase premiums."

Recasting Foxman's stated concerns into question form -- are Jewish institutions paying higher insurance premiums as a result of 9/11? -- the ambiguous but unavoidable answer is both yes and no.

Synagogue rates

not much higher

The basic premise -- that Jewish institutions are paying higher insurance premiums since 9/11 -- is accurate, but a sampling of Denver area institutions shows that this pattern does not hold true across the board. Nor are Jewish institutions the only entities feeling the pinch.

Synagogues, in fact, are hardly noticing any differences at all.

"There's been no increase in insurance premiums after 9/11, except for a two to three percent rise, which I'm sure is due to inflation," says Neal Price, executive director of the Hebrew Educational Alliance.

Nor have insurance companies asked the Alliance to increase its security precautions, apparently considering them adequate.

"One thing that people understand is that synagogues tend to have security one step over churches," Price says, adding that while Denver police officials did review security procedures with the synagogue after 9/11, the synagogue's insurance carrier hasn't showed any more concern than it did before the terrorist strikes.

At another large synagogue, Rodef Shalom, the same holds true.

"Our particular policy has not significantly increased, at least since last year," says Sandy Greene, executive director. She says that Rodef Shalom's insurance carrier actively worked with the congregation in order to keep its rates down, primarily by handling administration in-house, reducing agent's fees.

"I was expecting a big jump, a big hit," after 9/11, because of perceptions of increased risk, Greene acknowledges, "and I was pleasantly surprised. I feel very lucky that we haven't seen that increase."

In this case, however, when the insurance company did a facility survey last year, it was very careful to scrutinize the synagogue's security arrangements. One of the reasons why Greene feels premiums didn't significantly rise was the fact that Rodef Shalom has done a lot to improve facility security, especially after its recent renovation project.

Temple Emanuel has a similar report.

"We didn't experience any increase," executive director Janet Bronitsky says of Emanuel. She acknowledges, however, that the congregation's insurance policies were last renewed in August, 2001, just before 9/11.

Still, Bronitsky says she doesn't expect to see any significant differences. "I spoke with our insurance agent," she says, "and he wasn't worried about that."

JCC rates
skyrocket

The same sanguinity, however, is not being enjoyed by Denver's two largest non-synagogue Jewish agencies.

"This past fiscal year, the insurance premium increased in the 10-12% range for the Allied Jewish Federation," says Bill McGuire, controller for the federation. The rise is in premiums for policies that include property, auto and liability coverage.

More disturbing to McGuire is that the federation's insurance broker, when asked about the hike, was not clear on the reasons.

"He didn't attribute it to 9/11 in particular," says McGuire, "but the fact is that we hadn't filed any claims during that period. When I asked him specific questions about why it was increased, there was a lot of 'I don't knows.'"

Through attendance at United Jewish Communities gatherings, McGuire has learned that many other federations across the US have received similar premium increases. "And I know that other federations have received much larger increases," he adds.

In conversations with other federation business managers, McGuire says he's hearing a troubling refrain -- few are being told why their insurance premiums have gone northward.

The rise, he says, is important, especially to a non-profit institution that operates on a tight budget.

"Any 10% increase in a particular line item would be significant to any organization," McGuire says of the impact itself. "It means we have to redirect resources that we could have used elsewhere. This 10% will be absorbed in our operating expenses, but if it were to continue, if we were to have a series of 10% increases, well, our operating budget is pretty lean. It could begin to be a serious problem, but we will try to manage this within the operating expenses of the federation."

At the moment, McGuire says, the premium increase won't have a direct impact on federation allocations. Further increases, however, could very well do that, and would certainly force the federation to take a "very hard look" at the way it insures itself.

Still, by comparison to the Robert E. Loup Jewish Community Center, the federation is getting off easy.

The JCC has seen "substantial" increases since last September, when the JCC was forced to find a new carrier, reports Adrian Bolders, director of operations.

The JCC was dropped by their previous carrier because "apparently we didn't meet their coverage profile," Bolders says.

While he suspects this may be due to fears of high risk due to potential terror attacks, he has no hard evidence to back this up, nor did the previous carrier explain its specific reasons.

Their new carrier came in at a significantly higher premium for the wide range of policies the JCC carries -- some 55% higher.

"We asked the question," Bolders says of the amazing jump, and the JCC's insurance broker informed them that the JCC is not being singled out because it's a Jewish institution.

"What I was told was that in general, coverage is going up for everybody. Everybody is getting hit. There is a notion that it's 9/11, and another notion that the insurance companies are getting killed in the financial markets."

As to whether the insurance companies fear a greater risk of terror attacks on Jewish institutions such as the JCC: "I have not been able to put my finger on that," Bolders says. "Who knows?"

It may also be that the previous carrier simply decided that the JCC's wide ranges of uses -- everything from entertainment to classrooms to fitness and athletic facilities to senior gatherings -- makes it a difficult, and perhaps excessively risky, institution to cover.

Whether the previous carrier felt that the center's Jewishness makes it a more likely target for terrorists remains unknown, Bolders says, adding the speculation that insurance companies are probably reluctant to cite that reason for dropping a client or raising premiums, out of concern for their own legal exposure.

All Bolders knows for sure is that "we have had no major claim" in recent memory.

When the new carrier did a site review of the JCC, company representatives spent four hours examining the center's potential physical hazards, fire protection and warning systems, general cleanliness, chemical storage procedures and so on.

"They gave us a clean bill of health," Bolders says, adding that the institution's security procedures "was not a big issue" with them.

The industry perspective:
It's not terror

The insurance increases that some Jewish institutions are seeing are indeed related to 9/11, says a local industry practitioner, but probably not in the most obvious sense.

In the opinion of Mark Pells, co-owner of Pells Insurance Associates, a Denver agency and brokerage, rates are climbing not because insurance companies fear that Jewish institutions are likely terrorist targets but for economic and market reasons.

Pells, who represents several Denver Jewish institutions, says the problem is the reinsurance market. In what he admits is a "gross oversimplification" of the issue, Pells explains that insurance carriers routinely "lay off" parts of their risk in exchange for part of the premium, to reinsurance companies.

A common example in what he calls "treaty" reinsurance would be for the primary carrier to sell 80% of the risk to a reinsurance company for 50% of the premium. The carrier continues to absorb most of the costs associated with policies, such as underwriting.

Reinsurance, simply put, has risen dramatically in price, Pells says, which pushes primary carriers to raise premiums.

"In the past, insurance has been cheap because reinsurance companies haven't been making their money in underwriting," Pells says. They were, in fact, making much of their profit in the stock market. The capital they made there, during the boom years of recent memory, more than made up for the risks they had to cover. When the capital is higher than the risk, reinsurance is lower.

What changed was not only the prolonged plummet of the stock market, but the very real losses incurred on 9/11, coupled with a new atmosphere of fear and perceptions of increased risk.

"So all of a sudden, the capital in the market has contracted as the risk has increased," Pells says. "These factors are going to affect the cost of reinsurance coverage."

In sum, the increased costs are passed on through higher premiums and not -- Pells is convinced -- because a particular institution is Jewish and therefore at an increased risk of terrorist attack.

Pells agrees with Bolders' theory that the JCC recently lost its policy more because of its nature as "a specialized risk" with highly varied services and facilities. That its new insurance policy was significantly higher can be partially explained through the reinsurance issue along with other adaptations in the industry, namely that a lot of carriers are reorienting their client lists.

Of Pells' several Jewish institutional clients, "All have had increases," he says, "some larger than others." So have the non-Jewish clients, however.

There has been talk in the industry, he acknowledges, of whether Jewish agencies should be seen as increased risk. "I have had some inkling, and this is tough to pin down, that there has been some discussion of the nature of the risk of being Jewish," he says. To his knowledge, no premium has actually been increased based on that reason, Pells says.

Which is not to say that the risk of terrorism is not factored into premiums, he adds. It certainly is, which follows a virtual law of nature in insurance -- the level of risk is directly reflected in the cost of insurance.

"In general, that consciousness of security has been more applied to specific risks, whether they're Jewish or not," Pells says. "For instance, shopping center risks."

Such issues as the terrorist exclusion and the current debate being waged over certified versus non-certified terrorism (usually expressed as foreign vs. domestic) address what Pells feels is the legitimate issue of the insurance risks of terrorism.

While some companies are already writing policies that differentiate between certified and non-certified terror, this is being done only at the "very highest levels of coverage," Pells says, "not at the level where the ordinary person or business would have to deal with it."

Jewish institutions, including federation, JCC, synagogue and schools, would probably not see any such attempts at differentiation, Pells says.

His conclusion is that many Jewish agencies are indeed paying more for their insurance, but not because of a greater likelihood of being targeted by terror.

"As a terror target, I don't know," he says, "but as an insurance target, being singled out as a likely target of terrorism, I can state unequivocally no."

The term "redlining," once used to describe discriminatory practices in housing, is also used by the insurance industry to describe a similar dynamic -- ethnic, racial or religious discrimination in insurance coverage.

"I haven't seen any redlining -- when an insurance company won't write something in a certain area, for ethnic reasons or something like that. I don't see any of that here."

Finally, Pells questions the whole premise that a synagogue or other Jewish facility should even be considered as an increased risk.

"I don't think they're overly worried about a shul being firebombed," he says of insurance carriers. "That's an old risk that's always been there anyway. They're worried about a major bombing of a large building or facility. Your target would be an effect, a landmark, an infrastructure issue. I don't think they're [terrorists] going to make a statement in the US by blowing up a shul."

Church Mutual: big player

in a specialized field

Echoing much of what Pells says, and expanding on it, is Pat Moreland, vice president of marketing for Church Mutual Insurance Co., a Wisconsin-based firm that insures some 82,000 religious institutions in the US, making it the biggest player in its specialized field. Several Denver-area synagogues are covered by Church Mutual.

Moreland confirms that rates for some religious institutions --particularly the larger ones -- have gone up as a result of 9/11. The relevant dynamic, however, is the cost of reinsurance, which has directly affected costs for primary insurers like his firm.

"Reinsurance," he says, "is tougher to get and it's more expensive."

Moreland feels this is largely because of direct losses experienced on 9/11 by reinsurance companies. Estimates of those losses are running anywhere from $30 billion to $60 billion.

Of primary concern at Church Mutual, Moreland says, is a policy of even-handedness. "We don't separate synagogues from anyone else," Moreland says, "and we don't price differently by denomination."

Churches and synagogues are offered premiums based on those institutions' individual risks, in which a wide range of factors, including security, are considered. Some pay higher premiums than others, or are not insured at all, based on very poor maintenance or extremely risky practices.

Tongue in cheek, Moreland illustrates: "If they do their own fireworks show, for example, we're probably not interested in insuring them."

But the basic risks of terrorism, or anti-religious vandalism or arson, faced by synagogues are not radically different from those faced by churches or mosques, Moreland says. He points to the string of arsons at African American churches in the South several years ago, and a fairly predictable pattern of arson or vandalism at any number of churches and synagogues.

"Arson," Moreland says, "has always been there."

Despite 9/11, Church Mutual does not fear that synagogues are, or will become, inordinately favored targets of terrorists. The company does not shrink from insuring synagogues and in fact it is launching a concerted effort to increase its share of the synagogue market.

"In the Jewish market, we're increasing our efforts," Moreland says. "We're trying to increase our business in the Jewish arena, not decrease it. To my thinking, a synagogue is no different than any other organization that we write. It's no different than a church or a mosque."

Illegal to charge

Jewish institutions more

While a policy of even-handedness may be company policy -- and wise business practice -- at companies like Church Mutual, it is also mandated by law.

If an insurance company systematically charges higher premiums to Jewish institutions than to other, comparable, entities, "that should not be going on," says Doug Dean, newly-appointed Colorado Insurance Commissioner.

An assortment of federal and state laws are in place to prevent insurance redlining, he warns. If any Jewish organization knows of such insurance practices, or suspects them, Dean says his office wants to know about it.

So far, "nothing has reached my desk on that," he says. "If we are presented with evidence that a synagogue is being treated differently from a Catholic Church or anything else, that's when we would step in."

The fines that could be levied in such a case could be substantial, he indicates.

Meanwhile, says Dean's second-in-command, Deputy Commissioner Janet Byrne, Colorado insurance rates are "absolutely" going up.

"We are currently in a hard market in which the [insurance] companies are being very selective about the risks that they'll take."

Since 9/11, premiums for both businesses and non-profit institutions in Colorado have risen, on the average, between 20-30%, Byrne says.

"We have reports from companies who are purchasing general liability coverage and are paying between 20-30% more than last year, and from certain companies that are specialized, such as contractors, who aren't able to get coverage at all."

This is, she emphasizes, "a fairly broad statistic" that is not demonstrating discriminatory patterns as to race, ethnicity or religion.

Dean and Byrne agree that 9/11 is the primary culprit for the premium increases currently in evidence in Colorado and elsewhere. The short-term future, they predict, will probably witness more of the same.

Last year's congressional action prohibiting the terrorism exclusion will force insurance carriers -- already worried over catastrophic losses from terrorist acts that could literally force them into bankruptcy -- to jack up premiums even further, Dean says.

"We can force them to cover that," Dean says of losses caused by terrorism, "but there's a price attached. It can be expensive."

In the strange new world after 9/11, there seem to more and more people who can testify to the truth of that simple statement.

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