The payouts by insurance and reinsurance companies for World Trade Center claims could be as high as $78 billion, says Benfield Greig director John Plummer. "The World Trade loss was the headlines, but not the story," Plummer adds. "Sept. 11 redefined the insurance and reinsurance industry…It was the most complicated loss. It's going to take years, really, for the full impact of this loss to be felt."

Already, airline premiums have gone up from a total of $2 billion industrywide to $12 billion, Plummer reports, dwarfing the 50% to 100% increases commercial property owners can expect to see upon renewals. However, the story also is what they won't see -- exclusions for terrorism will no longer be automatic after Jan. 1 and blanket limits on catastrophes are out – and what they will be required to do. Corporations will be expected to provide more details on their exposure to risks, and policies will be written with very specific named perils, Plummer explains. "Allow two to three months to start negotiating your insurance program," he suggests.

Gone are the days, Plummer adds, when adding additional coverage was a small incremental increase in premiums. "The pricing of risk was fundamentally wrong," Plummer says. "I think we need to be prepared for a whole new world where the perception of risk has changed and the price of risk has changed."

Adds Equity Office Properties CEO and President Tim Callahan, "This catastrophe will affect pricing and capacity for years to come." The largest office REIT in the US is budgeting 50% insurance premium increases in 2002, but price isn't the only concern, Callahan explains. "We're more concerned with the quality of the coverage as well as the insurance and reinsurance companies."

Transwestern Investment Co. Chairman Randall K. Rowe told the NAIOP conference his firm is seeing 75% increase, but is among those who think the government will become the insurer of last resort in the case of future terrorist attacks. "Government, at the end of the day, will step to the plate and backstop," Rowe says. "Coverage will always be there, but it's definitely gotten more expensive."

Meanwhile, the costs of security are expected to increase by 100% to 300%, says Henry R. Garcia, vice president of Kroll Schiff & Associates.

"It has been very difficult to ask people to enhance security systems, because there were no incidents," Garcia says.

The new world has corporations reconsidering hiring security personnel at minimum wage, card access systems, alarm monitors, security-conscious architectural changes, video surveillance and increased testing of programs.

"Cost implications of some of these improvements are significant," Garcia says, suggesting they are perhaps unavoidable. "If people don't feel safe in your buildings, they'll move out of your buildings."