The fallout from the World Trade Center collapse is approaching the construction industry, as higher premium costs in a variety of areas are anticipated in order to help insurers make up for monumental losses when the towers fell.

William McIntyre IV, chairman of American Contractors Insurance Group Ltd., Dallas, an industry-owned captive insurance company, told an annual risk management insurance conference last month that estimated insurance general liability premiums could rise as much as 200 percent. Auto liability and umbrella polices could rise 100 percent, and workers' compensation rates could rise from 6-35 percent.

As reported by the Engineering News Record, McIntyre said "insurance companies are being forced to introduce new discipline" to underwriting insurance policies because of increasing operational losses, declining investment income and the World Trade Center costs. Insurers are being forced to pay out an estimated $40-$50 billion following the attack on the towers.

However, with the impact of Sept. 11 events spread over numerous insurers, "there's no doubt the insurance companies can stand it," said Robert Hunter, director for insurance for Consumer Federation of America.

To combat the higher costs, contractors were urged to act quickly to lock in lower rates. To keep rates as low as possible, insurers are urging their contractor-customers to produce high quality work, maintain a safe work environment, and hire experienced workers.

"Produce high-quality work in a safe environment. That is the kind of customer that Zurich North America wants to do business with," said Michael Markman, the insurance firm's CEO of construction. He said that construction defects are a major problem for insurers.

For individuals, property insurance costs may rise, but it's unclear how other insurance costs will be affected.

"It's too early to tell until we understand the full dimension of what's involved here," said P.J. Crowley, vice president of the Insurance Information Institute. "Other than to say, this is why we have insurance."