The indirect consequences of the September 11 terrorist attacks on the United States will have a far greater impact on Canada’s insurance industry than the direct costs resulting from the tragedy, according to the special report, “Indirect Effects of Sept. 11 Will Change Canada’s Industry,” released by A.M. Best Co.

Although few Canadian insurers will be directly affected, dramatic rate increases and reduced coverage in reinsurance will transform the Canadian insurance industry, the report notes.

With the overwhelming majority of reinsurance treaties scheduled for renewal by Dec. 31, 2001, reinsurers, intermediaries and primary companies are gearing up for grueling negotiations that are not expected to end before mid- to late December.

Reinsurers anticipate rate increases ranging from 30% to 70%, depending on treaty type and underlying risk.

The report notes that primary writers are re-evaluating their business lines, considering the cost and availability of reinsurance when determining the pricing and renewals of certain risks.

A.M. Best says it is concerned about marginally capitalized coverage in regions with significant catastrophe exposure.

An excerpt of the report is found in the Nov. 12 issue of BestWeek, and at www.bestweek.com.

Subscribers can download a free printed copy of the full eight-page special report, or a combination of the printed report plus a spreadsheet file of the data for $75.

Nonsubscribers can download a printed copy of the report for $50 or a combination of the printed report and spreadsheet file for $100.