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Tuesday, December 07, 2004

WTC Attack 2 Occurrences?
Okay..But there are Repercussions

hat tip to ActuarialNews.com



Statement from Larry A. Silverstein Regarding Verdict in WTC Insurance Trial :

"I am thrilled with today's victory. But this is a win for all New Yorkers. Today's decision means an additional billion dollars of insurance proceeds will be available, which, together with Liberty Bonds, will ensure a timely and complete rebuild of the World Trade Center.

I strongly felt, and the jury agreed, that the destruction of the Twin Towers by two separate airplanes at two separate times was two separate occurrences and that these insurers have an obligation to pay their fair share to help make Lower Manhattan whole again.

"Everyone involved in the World Trade Center is determined to rebuild to the highest possible standards, and we have made amazing progress over the past three years. We topped out at 7 World Trade Center ahead of schedule and will have a completed building by the beginning of 2006. We laid the cornerstone of the Freedom Tower in a moving ceremony on July 4th, and nothing will deter us from our important mission."


This was very, very, very dumb decision, more likely, reflective of emotion rather than application of the law. However, now Larry Silverstein’s neighbors are going to pay the price.

Siverstein states in his press release that, “But this is a win for all New Yorkers.”

You tell me if this benefits New Yorkers. Now that a misguided jury has defined 9/11 as two separate occurrences, the Insurance Companies are not going to sit back on their haunches licking their wounds. The WTC plaza was not the only party filing an insurance claim concerning this event. There were thousands of businesses down in the Battery, over in the Financial District, and up towards Midtown that had various insurance claims. They filed for loss of electrical power (most with a 36 hour waiting period). They filed for exterior damage due to debris. They filed for clean-up costs related to the waves of dust, smoke, and rubble on the building exterior and interior. They filed for business interruption, loss of income, and projected loss of sales. They filed for coverage of their rent during repairs and lease protection while they recovered to the pre-incident condition.

All these claims had a deductible attached them requiring that the first $1,000 or $2,500, or $10,000 etc. come out of their own pocket. Thanks to Larry Silvertein (who was grossly underinsured while trying to save a buck) and a jury that, probably, was more adept to support the concept of rebuilding a “monument” over support of fairness, these companies and residences now have another bill coming due.

A significant number of Mr. Silverstein’s neighbors are going to owe a second deductible. The myriad insurance companies addressing the claims listed above took the position that it was a single occurrence and stuck to that in the pay out of claims in the entire of the Manhattan Island. Now, all bets are off.

A win for New York? No, a temporary win for Larry Silverstein, and an expensive proposition to those next door.

(linked to the OTB Traffic Jam)

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