May 4, 2004 by Canadian Underwriter
Swiss Re came out ahead in the latest legal round against World Trade Center leaseholder Larry Silverstein. A New York jury found in favor of the reinsurer that it is bound by the Wilprop policy form for its portion of the Twin Towers’ insurance coverage.
The dispute arose following the September 11, 2001 terrorist attacks, when Silverstein claimed the attacks should count as two separate insurable events, thus doubling his policy limit of US$3.5 billion. At the time of the attacks, the insurance policy on the structures had not been finalized, but a group of insurers led by Swiss Re contended they were bound by the Wilprop form, which they say defines the attacks as a single event.
Earlier, the jury determined that a group of insurers, including Lloyd’s syndicates, was bound by the Wilprop form, while three other insurers were bound by the Travelers property form (which does not clearly define “occurrence” under the terms of the policy). However, the jury was sent back to deliberations when it noted a decision had not been reached with respect to Swiss Re. Swiss Re is the lead insurer on the project, on the hook for 25% of the $3.5 billion in coverage.
“We are pleased that the jury has confirmed the contractual basis of our coverage,” says Swiss Re America chairman Jacques Dubois. “We have always been convinced that the maximum payout under a loss limit property policy could never exceed the sum insured, in this case US$3.5 billion.”
The trial is just one step in the legal process, with the jury in this case charged only with determining which policy was in effect for each insurer, not whether the attacks constitute “one occurrence” under the terms of those policies.