Insurers Debate: One Accident or Two?
Bloomberg NewsNEW YORK Larry Silverstein, who acquired the lease to operate the World Trade Center in July, is seeking $7.2 billion from insurers for the destruction of the center twice the amount insurers say he can claim.
The two hijacked airliners that struck the 110-story twin towers Sept. 11 were separate "occurrences" for insurance purposes, entitling him to collect twice on $3.6 billion of policies, a spokesman for Mr. Silverstein said.
Companies that insured the building, including Chubb Corp., Swiss Reinsurance Co., Allianz AG, Ace Ltd. and XL Capital Ltd., said that because the attack was coordinated it counts as only a single occurrence.
"This is something that's going to be debated for a very long time," said Julie Rochman of the American Insurance Association, a trade group representing Chubb and the other insurers.
Mr. Silverstein, who has vowed to rebuild the complex, is liable for more than $100 million a year in lease payments to the Port Authority of New York and New Jersey, which owns the 16-acre (6.5-hectare) site, the spokesman for the property company said.
About 13.4 million squre feet (1.2 million square meters) of office space was destroyed in the attacks and an additional 15 million square feet in nearby buildings was damaged, according to Insignia/ESG, the largest New York real-estate brokerage firm. The collapse of the towers caused the destruction of buildings 4, 5, 6 and 7 at the World Trade Center. The office complex was the largest in the United States.
As an industry, insurers have decided to treat the attacks as a single occurrence, said Keith Buckley of ratings group Fitch Inc., an organization that grades the financial health of insurers.
Nicholas Jones, a spokesman for Willis Group Holdings, which brokered the insurance on the trade center, said, "We are of course aware of Silverstein Properties' position in this matter, and we are working with Silverstein and the insurers and underwriters to bring this matter to an amicable solution as quickly as possible."
Executives of the insurance market Lloyd's of London, Swiss Re and other insurers of the buildings either declined to comment or were not available. "We don't talk about individual situations," said Glenn Montgomery, a spokesman for Chubb, based in Warren, New Jersey.
This article appeared in the International Herald Tribune, 2001-10-10, page 16.
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