The heat has been turned up substantially against insurers that have yet to pay claims stemming from the terrorist destruction of New York's World Trade Center, with a new lawsuit filed and construction workers taking to the streets to demand funds necessary to begin rebuilding.
WTC developer Larry Silverstein and the Port Authority of New York and New Jersey filed suit last week demanding that insurers pay what they owe for destruction of the Twin Towers on Sept. 11, 2001.
The lawsuit, filed in New York State Supreme Court in Manhattan, names Allianz, Employers Insurance Company of Wausau, Gulf Insurance Company, Industrial Risk Insurers, Royal Indemnity Company, Travelers Indemnity Company and Zurich American Insurance Company as defendants.
"The states of New York and New Jersey and the city of New York and the Port Authority have made it clear they will not allow foot-dragging insurance companies to impede the ongoing revitalization of downtown Manhattan," Mr. Silverstein said in a statement. "We expect a quick resolution that will force these insurers to finally pay what they owe."
Just before the filing, New Jersey Governor Jon Corzine, his New York counterpart, George Pataki, and New York Mayor Michael Bloomberg had threatened suit against the insurers if they used new lease arrangements as an excuse to back out of payments.
Some insurers have suggested they might not make future payments owed for redevelopment because the original plan has been changed.
"The financing of the redevelopment plan depends in large part on the property/rental value insurance," the latest lawsuit said. "The defendants, however, have persistently sought to shirk their contractual obligations to pay insurance coverage."
Mr. Silverstein and the Port Authority said in the suit they are seeking to establish that the reworked plan to develop the site "cannot provide an excuse for any defendant to avoid its obligations."
The insurers named in the suit declined to comment on the specifics of the litigation. However, a St. Paul Travelers representative, Marlene Ibsen, did say the carrier "remains absolutely committed to continuing to fund the rebuilding effort at the World Trade Center to the full extent of our policy obligations."
Meanwhile, construction workers gathered for a noisy demonstration across the street from "Ground Zero," the site of the former WTC, protesting the lack of progress on the proposed Freedom Tower. Shouting slogans and waving signs, the protesters called on insurers to unfreeze claims payments that will help fund the construction.
The protesters gathered at Liberty Plaza, where one of the insurers involved in the dispute–Allianz–has an office. Signs were waved, reading: "Keep Your Promise: Re-Build, Don't Re-Neg," and "Shame On You."
Mayor Bloomberg, a Republican, initiated the latest public pressure last month when he wrote six insurers urging them not to use the new arrangement for rebuilding at the World Trade Center site as an excuse to hold up payments to the site's developer.
Of the carriers involved, only GE Insurance Solutions (now owned by Swiss Re) indicated they would not hold up payments to Mr. Silverstein.
Alayna Tagariello, speaking for Swiss Re and GE Insurance Solutions, said, "We have been, and will continue to honor obligations under the terms of our coverage." She said attorneys for GE had said that conceptually, Mr. Silverstein's agreement with Port Authority "looks fine. We do reserve the right to review the final agreement. It appears to look fine from where it stands right now."
Mayor Bloomberg said on his radio show he believed an arrangement could be worked out with insurers–but if not, he warned they could be the target of legal action.
The other insurers addressed in letters from the mayor were: Allianz Insurance Company, Employers Insurance of Wausau, Royal & Sun Alliance USA, St. Paul Travelers Companies and Zurich American Insurance Company.
In April, Mr. Silverstein reached a deal with the bi-state agency that owns the land–the Port Authority of New York and New Jersey–in which he agreed that insurance proceeds and $1.67 billion in Liberty Bonds would be used to finance rebuilding, and the PA would own the new Freedom Tower as well as another of the five high-rise buildings to go up on the site.
Later, Mr. Silverstein warned that insurers–with which he has fought in court over how much his claim was worth–had threatened to withhold payments because of this new agreement.
Mayor Bloomberg's letter said he was writing after learning some insurers would not confirm that the new agreement "would not alter their insurance obligations," and may "seize upon an essential component of this plan–the transfer of the rebuilding of Towers 1 and 5 from Silverstein to the Port Authority–as an excuse for denying payment."
The mayor's letter said it made no sense for insurers to say that both the Port Authority and Larry Silverstein cannot rebuild the site and use insurance proceeds to help do so. He wrote that he was urging the insurers to "reject unnecessary legalistic delays and hair-splitting," and not use the agreement as "pretext" not to pay rebuilding costs.
During his radio show, he said "you can always sue," but first there was public pressure that could be brought to bear, and he did not believe carriers would want to take responsibility "for slowing down a memorial to 2,800 people–a memorial to an attack on freedom and democracy."
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