September 23, 2001, The Mail on Sunday (London) "Legal nightmare over terror bills; Vital insurance deals on twin towers were incomplete," by Lisa Buckingham,
CRUCIAL paperwork for insuring the World Trade Centre had not been completed when terrorists attacked, Financial Mail discloses today.
Cover for the twin towers was being arranged by Willis Group, the world's third largest insurance broker, say senior insurance sources.
But now it has emerged that policy wordings had not been finalised by the time the twin towers were destroyed. A huge raft of lawsuits seems inevitable as insurers wrangle over who should pick up the [pound] 2.5 billion bill for buildings and third party liability cover, shared by 20 insurers.
The lives of workers in the towers were covered by separate policies.
Estimates of the total claims in the wake of the tragedy - for loss of life and interruption of business as well as physical devastation - have risen towards [pound] 50 billion.
The cost is believed to include the value of one of the world's most precious art collections, held on the 105th floor and belonging to broker Cantor Fitzgerald. It included sculptures and drawings by Rodin.
A spokesman for Willis in New Jersey declined to comment. But any ambiguity in policy wordings could allow insurers to dispute their liabilities. They could take legal action against one another. Or they could try to force Willis to foot some of the bill, which in turn might mean Willis claiming against its own insurers who cover the cost of the broker making a mistake.
Willis, one of the oldest insurance brokers in the world whose UK headquarters are in the historic Trinity House building opposite the Tower of London, was floated on the New York Stock Exchange earlier this year.
Three years earlier, it had been bought out with backing from Wall Street financiers KKR.
Meanwhile, the influential Business Insurance magazine has calculated that the Lloyd's of London will have to meet nearly a fifth of property insurance losses on the World Trade Centre - far higher than previously thought.
Analysts at US investment bank Morgan Stanley last week drew up a confidential report suggesting that Lloyd's could be in deep trouble in the wake of the US attacks.
Lloyd's dismissed the report as 'alarmist'. A spokeswoman said Lloyd's has [pound] 18 billion of immediately available capital to pay claims. The market's regulator had checked individual solvency levels to ensure that investors could meet their bills, she added.
Lloyd's has not issued an estimate of what it expects to pay. But insiders say the scale of likely claims is well above levels suggested immediately after the atrocities. Swiss Re and Munich Re last week doubled previous estimates of their exposure.
Berkshire Hathaway, the investment company run by American investor Warren Buffett, said it now expects to have to pay $2.2 billion.
Many Lloyd's Names - individuals who back the market for more than [pound] 1 million and who could face a cash call of more than [pound] 100,000 a head as a direct result of the World Trade Centre claims - are thought to be planning to increase their exposure to the market.
Michael Deeny, chairman of the Association of Lloyd's Members, said: 'I will increase my underwriting and I know plenty of people who are thinking of doing the same.' The Names are convinced that insurance premiums will soar as the full impact of the world's largest insurance claim is felt in the global underwriting system.
Buckingham, Lisa. "Legal nightmare over terror bills; Vital insurance deals on twin towers were incomplete." The Mail on Sunday (London, England). 2001. HighBeam Research. (October 3, 2010). http://www.highbeam.com/doc/1G1-78533958.html