Insurers Begin Recovery Immediately

Editor's Note: Julie Gallagher and Greg MacSweeney contributed to this article.

The insurance industry exists to indemnify those who suffer losses, but on September 11 the industry also suffered grievous losses, along with the world as a whole.

The insurance industry has long been well-represented in lower Manhattan and a number of insurers had offices in the World Trade Center (WTC) and the buildings immediately surrounding what has come to be called "ground zero." At press time, many employees were still missing and several were hospitalized. Even companies not in the immediate vicinity of the attack were affected by dust, debris, security controls and power outages that continued long after the attack.

But despite the terrible injury, shock and hardship caused by the attack, companies—and most importantlyemployees—showed great preparedness and energy, activating contingency plans and restoring operations in a very short time.

Aon Corp. (Chicago, $22.2 billion in assets), whose offerings include risk management, insurance brokerage and reinsurance consulting services, occupied floors 92 and 98 through 105 of Two World Trade Center, the second tower hit and first to fall. At press time, of the 1,350 Aon employees potentially at risk during the attack, 200 remained missing.

In addition to the human dimension of the event, Empire Blue Cross Blue Shield ($2.2 billion in assets)—which at press time reported nine employees missing and three hospitalized—had to cope with the destruction of its headquarters located in One World Trade Center, on 10 floors between floors 17 to 31. As the majority of the firm's customer service and claims processing operations are located in upstate New York, much business was able to continue uninterrupted, says CEO Michael A. Stocker. The headquarters housed executive and human resources operations.

Another insurer, AIG ($268 billion in assets), has a large presence in downtown Manhattan, including its headquarters at 70 Pine St. and a facility at 160 Water St.—just blocks from ground zero. Kevin Murray, CIO, AIG Claim Services, was attending a meeting at the latter address when the first plane struck the north tower at 8:45 a.m.

As the north tower—One World Trade Center—collapsed at 10:29 a.m., AIG's Aviation Brokerage, located on the 53rd floor, came down with it. AIG has not released any information about its employees, but Murray believes approximately 10 are missing, some of whom were aboard planes involved in the day's events.

Employees of Peoria, IL-based RLI Insurance Corp.'s ($1.3 billion in assets) surety and executive products offices were on the 80th floor of the north tower when the first plane struck. "Three of RLI's five World Trade Center employees were in the office at the time and all escaped safely," says Gary Wright, RLI spokesman.

The operations of Hartford Financial Products, part of the Hartford Specialty unit of The Hartford ($167 billion in assets), were located at Seven World Trade Center, which also collapsed. However, according to CIO Craig Lowenthal, all employees were evacuated and are safe.

New York-based Marsh & McLennan, a global brokerage, had some 1,900 employees in both of the WTC towers; at press time, more than 300 employees, all of whom worked at One WTC, were missing.

Too Close for Comfort

In addition to the companies actually located in the WTC, other insurers were perilously close to ground zero. St. Paul Re (St. Paul, $41 billion in assets) has offices one block from the World Trade Center and directly behind the Millennium Hotel, a building thought to be on the verge of collapse in the days immediately following the attack, says Andrew Cole, senior vice president and CIO. "All of our 300 employees are safe," says Cole.

Travelers Insurance (Hartford, part of Citigroup, $902 billion in assets) has offices in five locations near the WTC. All were closed following the attack due to security concerns. At press time two offices had been reopened and all employees are safe and accounted for. None of Travelers' downtown New York operations had any significant IT operations and at no time "was Travelers' ability to conduct business or handle claims impacted by the disaster," says Kris Hammond, Travelers spokesperson, adding that all customer records and information is safe.

Although headquartered just across the river in Newark, NJ, Prudential Financial ($371 billion in assets) has two offices close to the WTC that were closed until the Monday following the attack. "All Prudential employees are OK," says Karen Howell, Prudential spokesperson. "The offices are for Prudential's trading and brokerage operations. Both were running normally when the markets reopened."

The New York State Insurance Department, located 10 blocks from the WTC, has no reports of missing or injured staff. (However, former New York insurance commissioner Neil Levin, who had become executive director of the Port Authority, was among the missing.) The New York City Department of Buildings has cleared the building for structural soundness, though employees were yet to return at press time.

Contingency Plans

According to June Drewry, vice president and CIO, Aon Corp., the company's operation at Two World Trade was not a major IT center. It was, however, a major hub for the company's New York, New Jersey and Connecticut businesses. Besides the devastating human loss incurred by the company, the equipment used by 1,200 employees was lost. "Disaster recovery kicked in immediately," says Drewry. "All non-essential project work was put on hold and all resources were shipped to disaster recovery."

Drewry and members of her team were in London at the time of the attack. A command center was set up there and in the US. "Since everyone was working 21 hours a day, the time difference didn't make any difference," she says.

According to Drewry, ISDN backup kicked in immediately for all offices that were spokes on Aon's WTC hub. "It currently works, but not at the same capacity," reports Drewry. Although at press time she was not sure if the offices had been legally secured, Drewry noted that Aon had found two alternate office locations. "If we are able to secure these spaces it will be an easy move technologically speaking," she says.

Empire BCBS has opened a temporary headquarters in Melville, NY, on Long Island, but is committed to reopening headquarters in New York City, according to a spokesperson. She adds that "our current priority is to provide counseling," and says the carrier has begun "a slow process of bringing people back in stages."

Because of security restrictions, AIG's downtown locations remained closed until Monday, September 17, according to Murray. Immediately following the disaster, however, he adds, the firm moved many employees to its offices in Tarrytown and Jericho in New York state, and Parsippany and Livingston in New Jersey. "We had two people to a cubicle and we were moving people out," to get higher-priority employees back to work, Murray says. "By noon the next day we were pretty much business-as-usual from a systems, e-mail and networking standpoint."

RLI's Wright says that "within an hour of the north tower's collapse, we had a disaster recovery center established at the Peoria home office."

St. Paul Re's disaster recovery plan with SunGard Recovery Services had called for space for about 80 workers in Hoboken, NJ (just across the Hudson River from Manhattan), but due to the severity of the disaster, all space in Hoboken was "scooped up" by government agencies and other firms, says Cole. "You never think you will have to use your disaster recovery plan. It felt strange...actually having to use it."

With St. Paul Re's downtown operations closed for the foreseeable future, the company has relocated most of its operations about 35 miles west of Manhattan in Morristown, NJ. "We have about 60 users set up there," Cole says, adding that the company is setting up an additional 50 telecommuters.

"We had all mission-critical systems up an running by 8 a.m. on Monday Sept. 17," Cole says. "But it took a lot of us working 24-hour shifts in Morristown. We were determined not to let these terrorists beat us. Patriotism and adrenaline kept us going."

Although SunGard could not provide enough room for all companies displaced by the disaster, it is running back up systems for St. Paul Re from its data center in Philadelphia.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio