February 11, 2004

By Reuters

New York - The trial that could determine how much money is available to rebuild at the World Trade Center site, destroyed on September 11 2001, began this week, with insurance companies' lawyers making the case that the two hijacked plane attacks were one event for insurance purposes.

Lawyers for insurers argued that one day after two hijacked planes toppled the Twin Towers, the risk manager for leaseholder Larry Silverstein identified the active insurance policy as one that described the destruction as one event.

Silverstein claims that insurers owe him about $7 billion in payouts, double his policy, because two hijacked airliners destroying the Twin Towers represented two distinct events.

The fax cover sheet sent by the risk manager to Silverstein's lenders on September 12 2001, presented in court on the first day of arguments before a New York jury, will be a central part in proving the insurers' case that, at most, they owe $3.5 billion as compensation for the loss of the buildings.

About a dozen insurers, led by Zurich-based Swiss Re, said he should get half that amount because the dominant insurance policy on September 11 was a form called Wilprop issued by broker Willis Group Holdings.

Under that form, the destruction of the Twin Towers was one event.

"Pre-September 11, Silverstein and Willis both wanted the Wilprop form," said Swiss Re lawyer Barry Ostrager in a New York district court. 

Ostrager presented documents he said showed that the Willis form was sent to insurers throughout the US and Europe in the months before 9/11.

And on the day after, a fax was sent to Silverstein's lenders by Robert Strachan, who was handling insurance coverage for Silverstein, that read: "The occurrence definition ... is in the Willis policy that we are working with."

Days later, Strachan was "walled in" by Silverstein's lawyers as they moved to de-emphasise the Willis form, Ostrager said.

Herbert Wachtell, representing Silverstein, disputed the account offered by Ostrager and other insurers, saying instead insurers were not governed by the Willis policy and in many cases never saw or heard of it.

Wachtell cited a deposition by a Willis broker that said he had a discussion with Swiss Re that insurance coverage was going to be migrated to a policy written by Travelers Property Casualty. The Travelers form does not specifically define "occurrence", leaving it open for debate whether the 9/11 destruction was one or two events.

The resolution of the dispute will determine how much money is available to rebuild the site where the Twin Towers once stood and could influence what actually gets built there.