Catastrophe modeling is a critical component of analyzing and pricing risk. At Zurich, homegrown catastrophe modeling tools, as well as those from Risk Management Solutions Inc. (RMS), Newark, Calif., have been an integral part of its underwriting process for several years-but only for natural disasters.Then along came 9/11, and Zurich-like every other insurer with property and workers' compensation policies in the United States-was completely unprepared.

"Terrorism exposure in the U.S. was something no one had figured out-and I mean no one," says Gary Kaplan, senior vice president and chief underwriting officer at the Schaumburg, Ill.-based U.S. headquarters.

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