Insurers Win One, Lose One In WTC Trials Maximum insured loss would be $4.7 billion, but appeals possible in second case
They are likely to be remembered as the trials of the decade for property insurersa pair of dramatic court battles over whether the Sept. 11, 2001 destruction of the World Trade Center by terrorists, killing over 2,600 people, was one event for insurance purposes or two distinct losses, thus doubling an insurers potential exposure.
At stake were billions of dollars in insurance coverage that WTC leaseholder Larry Silverstein was counting on to help finance the controversial rebuilding project at Ground Zero.
In the first trial, decided last spring, 10 of the 13 carriers involvedincluding Swiss Re, with the biggest share of the coverage at $877.5 millionwere let off the hook, relatively speaking.
In fairly short order, the jury found that those 10 insurers were bound by the now famous Willis Property ("WilProp") form, which stated that an "occurrence shall mean all losses or damages that are attributable directly or indirectly to one cause or to one series of similar causes. All such losses will be added together and the total amount of such losses will be treated as one occurrence irrespective of the period of time or area over which such losses occur." That limited the WTC loss for those carriers to one insurable event.
However, nine other carriers not bound by WilProp did not fare as well in the second trial, as jurors earlier this month agreed with Mr. Silversteins contentionafter 11 long days of deliberationsthat there were two separate attacks at two distinct times against two different WTC towers. This opens up the possibility of collecting double the per-occurrence limitup to $2.264 billion. If Mr. Silverstein does indeed get a maximum claims payout in an appraisal process to follow, he would receive a total of $4.6 billion from insurers to help him rebuild.
However, the carriers that lost Round Two are considering their options, including legal appeals, and settlements are always a possibility. Stay tuned.
Reproduced from National Underwriter Edition, December 16, 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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