Early estimates of around $10bn insured loss from the WTC and related events look naive in hindsight.

As Q3 figures begin to be filed, the extent of the losses relating to 11 September still remain vague figures. Estimates, originally in the region of $10bn now have a lower limit of $30bn, and some feel they may go even further, closer to the $70bn mark.

The problem with all this is that it is still unclear exactly what the industry's exposures really are. Swiss Re has recently start proceedings, stating that the circumstances which brought down the twin towers of the World Trade Center constitute one event not two. Silverstein, the property speculator who only a few weeks before the towers collapsed bought the lease on them, is arguing that the loss is two events. This difference of opinion is worth $3.5bn, and proves how speculative any figures remain at the moment.

It also slows down the claims-paying process. So far, the losses arising from the hulls of the four planes downed in Pittsburg, Washington, DC and New York have been paid by aviation underwriters, to the tune of $130m. But few others have reached the point of settlement. Nevertheless, re/insurers are beginning to make provisions, and Lloyd's syndicates in particular have found themselves under scrutiny. Large cash calls coming to close on $1bn for the 1999, 2000 and 2001 years of account have hit the headlines, to a certain extent somewhat unfairly. As an alien reinsurer, Lloyd's is required to lodge funds in a trust fund equal to its gross reinsurance exposures to US business. Although Lloyd's appeared to have received dispensation from US insurance regulators to reduce this level to 60% of gross liabilities, the true position is somewhat unclear, and received wisdom is that it will be required to fund 100% of gross exposures – estimated in the region of $5bn – by the 15 November deadline.

A large proportion of the Lloyd's cash calls related to these exposures, which Lloyd's centrally estimates will reduce to around $1.9bn net. Rating agency Fitch reckons Lloyd's figures are on the low side, but even so, it shows how much the market has been turning to reinsurance protection in recent years. This does not detract, however, from the fact that syndicates may now need to find extra funds to put into the US reinsurance funds, and this cash may cast a pall over the syndicates' liquidity positions. Added to this, Lloyd's members are in the final stages of sorting out their funding arrangements for 2002 underwriting. Few doubt that the year to come is likely to have the best underwriting conditions seen for many years. Estimates are that catastrophe reinsurance business will increase by 35%, risk excess by 125% and aviation/marine reinsurance business by 150%. Direct classes are expected to see substantial hikes, as well, ranging from 15% for small risks in the US property sector to 170% for large risks in the US property sector.

But these average renewal rates tell just part of the story. That the market was already on the up is not disputed; just the rate of acceleration. Figures from a specialist reinsurance syndicate show that before 11 September, renewal increases were expected of 36% for property catastrophe, 16% for risk excess, 73% for marine, 115% for energy and 38% for aviation. Following the attack, these have changed to 93%, 85%, 196%, 224% and 244% respectively.

As well as these rate hikes, conditions have become much tighter. There is a widespread expectation that many risks will be unbundled for renewal, and buyers are being forced to look to more class-specific protections. This will enable reinsurers to better identify their aggregates – a problem at the moment as they try to assess their WTC exposures - and at the same time increase premium income. Trading conditions, too, are toughening, with premiums flowing through to underwriters sometime in as little a one quarter of the time that they have in the past.

Knowledge of the full extent of the losses may yet be a long distance off, but the market appears already to have tightened its practices.