Confusion Reigns At WTC Trial
Is it any wonder that just two weeks into the trial over coverage for the World Trade Centers destruction by terrorists, jurors were already hopelessly confused?
After all, Robert Strachan, the risk manager for WTC leaseholder Larry Silverstein, appeared to be confused as well–at least based on his testimony.
It seems that early on after the Sept. 11, 2001 disaster, he kept referring to one form that favors insurers on the key point of whether the attack was one or two events, even though he subsequently contends he was in error and was actually expecting coverage under a second form that does not define "occurrence" so clearly. This would leave the door open for over $7 billion in claims payments, rather than a single payment of $3.5 billion.
If the risk manager on the exposure was having trouble keeping track of which documents governed his firms claim for billions of dollars, how can laypeople on the jury who might have a problem understanding their own auto policies be expected to sort through this colossal coverage dispute?
"We got a note from the jury, What is this case about?" the presiding judge, Michael Mukasey, informed the court. There was laughter in the courtroom, but this really isnt funny, not with billions at stake. The judge advised lawyers from both sides to keep it simpleto shorten their presentations and make them clearer to non-insurance folks.
Perhaps insurers, brokers and corporate insurance buyers should keep that advice in mind the next time they negotiate various coverages. If "simplicity" and "clarity" had been standard operating procedure before Sept. 11, 2001, those poor jurors probably wouldnt be sitting through a trial to determine coverage.
Im not at all surprised to see Mr. Silverstein and 13 of his carriers arguing in a New York court before a clueless jury over not just what the policy says, but which document is the legitimate statement of coverage in the first place.
Last fall, when NU conducted its first "State of the Market" survey, we asked a simple customer service question. It was one of those deals where you print a statement and the respondent notes, on a scale of "one" (strongly disagree) to "seven" (strongly agree), how they feel.
When presented with the statement: "We receive our final insurance policies in a timely fashion, error free," two-thirds of corporate insurance buyers strongly disagreed, while only 8 percent were highly satisfied with their carriers on this point. Brokers were just relatively kinderone-third strongly disagreed, while only 14 percent strongly agreed that their carriers were on the ball.
With that kind of track record, could you blame the WTC risk manager for being confused about coverage terms on an exposure of this magnitude, especially since final policy documents were not signed before the Sept. 11 event (or is it events?).
Could the industrys lousy performance record come back to haunt those insurers on the hook for WTC claims? You bet it could.
If the jury gets the impression that confusion about coverage terms is the norm rather than the exception, they might be tempted to throw up their hands and order insurers to cough up twice what the carriers thought they owed. Im not sure I would blame them.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, February 27, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.
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