Was WTC Broker Ready
To Rewrite Coverage?

NEW YORK -- The broker responsible for getting insurance coverage for the World Trade Center was "considering various options" and refused to answer insurers' requests for policy details one week after the Sept. 11 terrorist attacks, a federal court in Manhattan heard Thursday.

The revelation came as Timothy Boyd, a broker at Willis Group Holdings Ltd., took the stand for the second full day at the trial between World Trade Center leaseholder Larry Silverstein and the insurance companies providing coverage on the Twin Towers.

A seven-man, five-woman jury must decide which insurance policy was in effect at the time the World Trade Center complex was destroyed. The jury's decision will ultimately determine how much money insurers will be required to pay out.

During the trial, a Sept. 19, 2001, e-mail was submitted as evidence, which showed Willis was refusing to answer questions about the insurance coverage eight days after the attacks. The e-mail, which was sent from Willis' chief executive to a syndicate of London insurers, quoted the Willis executive as saying he was "reviewing documentation" and "considering various options." As a result, he said, he was "unable to disclose policy" or any "terms and amount of coverage" or "the actual content and language" of the policy.

The e-mail appears to back up insurers' suggestions that the Silverstein team was re-examining and possibly re-writing the insurance coverage following the Sept. 11, 2001 terrorist attacks.

Boyd was shown the e-mail and asked if he, too, had been directed not to disclose any insurance policy information to insurers after Sept. 11, 2001. Boyd said he had never seen the e-mail before.

Larry Silverstein has been fighting to have the plane attacks considered two separate events, thereby entitling him to collect two payments of $3.55 billion. His insurers argue it was a single event, limiting him to a single payment.

Earlier Testimony

In earlier testimony, Boyd confirmed that a policy issued by Willis, called the WilProp form, was originally sent in July when his firm was seeking insurance coverage for the World Trade Center. (The WilProp form defines the word "occurrence" and deems the terrorist attacks a single event for insurance purposes.)

Boyd, however, told the court that he believed the form was replaced in mid-July to one issued by Travelers and that this form was the one controlling the insurance policy at the time Silverstein closed his acquisition of the 99-year lease on the WTC on July 24. (The Travelers form does not define the word "occurrence" - thereby leaving the door open for the tragedy to be declared two events.)

Boyd said he considered the WilProp form a "draft" form that would be used only as a "starting point."

The lawyer for the London insurers, David Boies, grilled Boyd over this contention and uncovered numerous discrepancies in Boyd's testimony. When asked when Boyd considered the Travelers form to be the "operative" form that would control all of the insurers, Boyd responded "Dec. 12." A surprised Boies asked "of what year?" At this point, Boyd corrected himself, and said he meant to say July 12, 2001.

Boyd admitted he had glanced only briefly at the Travelers form prior to July 12, and hadn't received his firm's full review of the form until 12 days later on July 24. He also acknowledged that his colleagues at Willis had all described the Travelers form as "a pain in the neck" and "not client friendly" and urged him not to use the form.

But Boyd said he was under the gun from the Silverstein camp to lock in insurance coverage on the Twin Towers so that the acquisition of the lease could be closed in July. He said that Travelers was needed to complete the coverage and that Travelers had insisted that its form be used.

Several E-Mails

Several e-mails, however, were then presented that seemed to contradict Boyd's position. On July 16 and 20, Boyd sent e-mails to a prospective insurer, North Island Facility Insurance, where he was seeking additional coverage. In his e-mail, he attached the WilProp form.

When asked why he sent the WilProp form if he thought the Travelers form was in effect, Boyd said he just wanted to be "consistent" in sending out the same material that he sent to other insurers originally when he was first seeking coverage for the WTC.

Then there was a July 25 e-mail between Willis brokers where Boyd wrote "up until the last minute of binding, we were trying to weed out Travelers from the placement."

Boies asked why Boyd would consider the Travelers form to be the operative one if his firm was trying to dump Travelers from the policy coverage altogether. Boyd said his statement in the e-mail "wasn't entirely accurate." He said he had "hoped" to replace Travelers, but knew it wouldn't happen.

Under cross-examination, Boyd said it was difficult trying to find insurers to cover the entire insurance placement, given the tough restrictions GMAC had placed on the insurance coverage. GMAC was Silverstein's key lender in acquiring the 99-year lease, and had made a number of stipulations regarding the insurance coverage, such as one that required all insurers be at least double-A rated by Standard & Poor's and another that insisted the period of indemnity, which includes business interruption payments, be at least two years. These restrictions severely cut down the pool of available prospective insurers, Boyd said.

At one point, Boyd said, Willis executives analyzed the status of the coverage without Travelers and found the shortfall was too big to cover.

In a July 12 e-mail, Boyd told his colleagues, "Unless advised otherwise, I intend to bind as follows: Use Travelers and accept form. Although the form is not the best, the banks are hung up big-time on AA paper."

Still, Boyd admits he never notified Westfield, which was Silverstein's retail partner in the WTC lease, the Port Authority, or most other players about the decision to bind all of the insurers under the Travelers form. He said his main contact was with Silverstein's risk manager, Robert Strachan, whom he said he tried to notify.

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