Lloyd's faces huge new claims for Ground Zero compensation

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The Independent Online

Several Lloyd's of London insurers may have to pay out hundreds of millions of dollars of extra compensation for the destruction of the World Trade Center, thanks to new claims from the state body which owns the land at Ground Zero.

Several Lloyd's of London insurers may have to pay out hundreds of millions of dollars of extra compensation for the destruction of the World Trade Center, thanks to new claims from the state body which owns the land at Ground Zero.

The Port Authority of New York and New Jersey is demanding a further $2.1bn (£1.15bn) from its insurers, which include several Lloyd's underwriters as well as France's Axa and Denmark's Copenhagen Reinsurance.

The Port Authority's claim would place a new burden on Lloyd's members who have already had to pay out about $350m of a $3.5bn insurance policy on the World Trade Center held by the property developer Larry Silverstein.

The group of underwriters have also handed over $950m to the Port Authority to cover repairs and rebuilding on several of the other buildings in downtown New York which were damaged by the attacks.

The underwriters have hired Ropes & Gray, a New York law firm, and launched legal action in federal court last week to fight the government agency's argument that it is entitled to triple that sum.

The court battle - expected to take up to two years and to incur hundreds of thousands of dollars in legal fees - is the latest disagreement about the final costs of 11 September 2001.

Many of the same insurers have been fighting a bitter battle with Mr Silverstein, who had a 99-year lease on the twin towers. Mr Silverstein argued he was entitled to a double payment on his $3.5bn insurance policy on the twin towers because the attacks were two events. The courts have largely upheld the opposite view that the destruction of the World Trade Center was one event.

The Port Authority is arguing that it should have additional compensation under a policy it had on the Center site that was separate to Mr Silverstein's policy. The Port Authority's contract, a general guarantee of coverage if a tenant in one of its buildings were to suddenly go bust, cannot be used given that the Silverstein policy was in place, the insurers have argued.

A source said: "It is normally the insured party that goes on the attack. The fact that the insurers have decided to take legal action indicates how confident they are about the outcome."

Lloyd's members are not expected to have to call on its central fund of emergency reserves, which currently stands at £556m. But the additional World Trade Center claim is unwelcome at a time when payouts from natural disasters around the world have been heavy, and while Lloyd's faces uncertainty about asbestos liabilities in the US.

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