III pegs 9/11 losses at US40.2 billion dollars

The New York-based Insurance Information Institute (III) is tallying losses from the September 11, 2001 terrorist attacks at US$40.2 billion. The attacks represents not only the largest loss in insurance history, but also the most complex, notes III president Gordon Stewart. “The vast majority of claims for homes and autos have been paid, but commercial claims are more varied and complicated. While many have been helped, this recovery process will take years,” he says.

Part of this complexity comes from the many lines of business affected by claims. One unknown is the number of liability claims that will be filed, as some claimants have not decided whether or not to file through the “Victims’ Compensation Fund”. Also, some business interruption files remain open.

Implicit in this estimate is the position that the attacks will be considered “one event” by courts currently hearing a case from World Trade Center (WTC) leaseholder Larry Silverstein, who is attempting to collect twice the US$3.5 billion indemnity by claiming the attacks as two separate events.

Silverstein’s case took a severe setback in late September when a federal judge in New York declared that the felling of the WTC towers by two planes on September 11, 2001 was one event in a case involving three of the structure’s insurers who are on the hook for US$112 million of the total $3.5 billion policy. The ruling applies to St. Paul Fire and Marine Insurance Co., Hartford Fire Insurance Co. and Royal Indemnity. “The ordinary businessman would have no doubt that when two hijacked planes hit the twin towers in a 16-minute period, the total destruction of the WTC resulted from one series of similar causes,” U.S. District Court Judge John Martin wrote in his decision. A second trial with the remaining insurers is set to commence in early November, and Silverstein has already indicated he will appeal the “one event” verdict in the first trial.