A group of insurers are suing the Port Authority of New York and New Jersey, the owner of the World Trade Center site in lower Manhattan, over the agency's new claim it is separately insured for a $2.1 billion "shortfall" in the WTC leaseholder's property insurance.
The plaintiffs are a group of 10 syndicates at the Lloyd's insurance market as well as eight other insurers: Axa Global Risks Ltd., Copenhagen Reinsurance, Great Lakes Reinsurance (UK) Ltd.; Houston Casualty, QBE International Insurance, Sirius International Insurance Corp., Wurttembergische Versicherung AG and Zurich Specialties London Ltd. The insurers' complaint was filed Thursday at the Manhattan federal court in New York.
The Port Authority had worked with WTC leaseholder Larry Silverstein in his legal fight against insurers for more than three years regarding coverage under Mr. Silverstein's $3.546 billion per-occurrence property insurance for the Twin Towers.
But citing the outcome of that litigation==which resulted in Mr. Silverstein failing to double the per-occurrence coverage payout==the Port Authority recently said there is at least a $2.1 billion "shortfall" in the amount necessary to rebuild 10 million square feet of commercial space at the WTC site, according to court documents.
The Port Authority had insurance on other property at the WTC site and throughout the New York area, and it has already received $950 million from its insurers for damage to WTC properties not controlled by Mr. Silverstein. The Port Authority is now arguing that this insurance also separately covers its interest in the supposed "shortfall" in the Silverstein property insurance and that it is entitled to double the $1.5 billion limit of its insurance to a total of $3 billion.
"The Port Authority is not entitled to...double its own insurance to make up for a shortfall in its litigation against the Silverstein insurers," said Kenneth Erickson, attorney at Ropes & Gray, which is representing the insurers that filed the lawsuit.
"Our clients collectively underwrote the largest portion of the Port Authority insurance and, when presented with this new position, they told the Port Authority that it was wrong and now file this action to seek confirming judgment from the same federal court that heard the prior case," Mr. Erickson said.
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