Barroom Talk Testimony Out Of Synch

The conflicting testimony from two key witnesses came during the fourth week of the federal jury trial between WTC leaseholder Larry Silverstein and 13 of the insurers that provided coverage for the WTC complex.

Jurors must decide whether these insurers are bound to the Willis Property form, whose strict occurrence definition limits the WTC claim to one event of $3.5 billion, or a Travelers form, which leaves open the possibility for Mr. Silverstein that the two jets crashing into the Twin Towers represent two separate events for insurance purposes.

Paul Blackmore, the U.K. Willis broker who oversaw the marketing of the WTC placement in the London and European markets in 2001, said in court last week that Swiss Re knew full well that the policy form governing the WTC coverage had been changed from the Willis Property form (known as the Wilprop form) to a Travelers form prior to the terrorist attack.

Mr. Blackmore also testified that when he ran into Swiss Re's underwriter, Daniel Bollier, at a hotel bar in Zurich on Oct. 3, 2001, Mr. Bollier had asked if Mr. Blackmore could re-insert the Willis Property form's definition of occurrence into the new operating form.

Recounting his meeting with Mr. Bollier, Mr. Blackmore said: We said hello. He was with other people and I was with my client, so we had a very brief conversation. In that conversation he commented that he would like the Wilprop occurrence definition in the Travelers form.

Mr. Blackmore added: I think I said I would report back to my colleagues and let him know if there is anything we can do. I didn't commit to anything. Mr. Blackmore said that once back at his London office, he had mentioned the request to one of his colleagues and to his legal department.

But after Mr. Blackmore stepped down from the witness stand, Mr. Bollier from Swiss Re, the largest player involved in this case, offered jurors a very different recollection of the meeting. It was in a hotel bar in Zurich, in the Hotel Ascot. And I ran into him, or he ran into me in that bar in the evening, he said.

Mr. Bollier told jurors that, contrary to Mr. Blackmores claim, he never knew there was any switching of the policy form from Wilprop until he received the Notice of Loss on Sept. 24, 2001.

I said [to Mr. Blackmore], you know, I find it awkward that policies are now being switched after the event and, in addition, we had the right to review the wording, we had reserved all the rights, and now it's just being switched. And I mean at that point in time it was clear what it was all about, because it was in the press, first of all, Mr. Bollier said.

I told Mr. Blackmore that it's pretty obviousbecause everybody can read the press, and insurers talk among each otherthat it's about the occurrence definition, Mr. Bollier told jurors. I told him, you know, I mean if that's what you are going to do, if you are going to switch the form on us, then, you know, please at least put your occurrence definition of Wilprop into Travelers.

Commenting further on the Notice of Loss statement, Mr. Bollier said: It was really strange. In that notification of loss, there was a policy wording attachedwhich was not the Wilprop wordingand that's when I figured out that this was the Travelers form for the primary $10 million layer.

In order to switch a form, I would have expected a formal request, like signing the endorsements, Mr. Bollier added. And you know, now, suddenly, we receive a form which I never talked about. It was just a different form, and to me it was really strange.

On the other hand, Mr. Bollier acknowledged that when he signed the insurance slip (the binder) on July 7, 2001, agreeing to provide 22 percent of the policy's total coverage, he had included numerous handwritten alterations that he requested be made to the Wilprop form, including more sub-limits, the deletion of certain sections, changes to a special-perils clause, and an additional clarification clause to address computer data-related losses. Also, in numerous areas, Mr. Bollier wrote the phrase, "to be agreed by SRI [Swiss Re]."

But Mr. Bollier downplayed numerous handwritten changes he had made, telling the court that it was always the Wilprop form that he was dealing with and that requesting changes in wording and additions is actually quite standard" when drawing up an insurance policy.

However, Mr. Bollier also acknowledged that on July 23, 2001, he had received an e-mail from Willis containing an electronic attachment with a copy of a Travelers policy form. But when asked what significance he attached to this document when he opened it, Mr. Bollier said, really noneno significance at all.

Mr. Bollier said he opened the electronic attachment, thinking it would be a document addressing the sub-limit issue that he raised before, but when he found out it wasn't, I closed that document and put it aside. He said he never considered the Travelers form to replace the Wilprop form because the Travelers form was an "off-the-shelf" form without any reference to policy numbers, premium, names of insured or other details.

The lead attorney for Swiss Re, Barry Ostrager, last week also tried to play down the whole Zurich bar episode and Mr. Blackmores account of the meeting, telling the presiding judge, Michael Mukasey: I think it is a barroom conversation that lasted all of 10 minutes, if it lasted that long. But Judge Mukasey, who always seems prepared to come back with a smart one-liner, quipped: Let's not demean any barroom conversations.

One can only hope that jurors can somehow make heads and tails out of this complex and conflicting testimonybut signs are not encouraging, and a comment made last week by Judge Mukasey offered yet another clue as to how some jurors may be getting frustrated over lengthy court proceedings.

I have been told that morbid jokes have been cracked in the jury room about [the trial lasting until] July, the judge told lawyers on March 2, after jurors were excused from the courtroom. During the second week of the trial, jurors had expressed growing confusion in the form of a note sent to the judge, asking for clarifications on what the case is about.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, March 5, 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.