WTC Broker Says He
Told Insurers Of Change
NEW YORK -- The broker responsible for getting insurance coverage for the World Trade Center said he was averaging 40 phone conversations a day about the coverage in July 2001 and didn't have time to formally document the conversations in which he told insurers the policy form was being switched, a federal court heard Wednesday.
The testimony came as Timothy Boyd, a broker at Willis Group Holdings Ltd. (WSH), took the stand for a second day in the trial between World Trade Center leaseholder Larry Silverstein and more than a dozen insurers. Silverstein is battling to have the plane attack declared two events, entitling him to a double payment of $3.55 billion, while his insurers contend it was a single event, limiting him to only one payment.
At issue is which policy form was in effect at the time. A form issued by Willis, called the WilProp form, was distributed to all of the insurers when the broker was first seeking coverage. This form views the attacks as a single event.
Silverstein's team, however, contends the form was changed to another one issued by Travelers Insurance, prior to Sept. 11. The Travelers form doesn't define "occurrence," leaving the door open for a possible double payment.
Boyd told the court he informed a number of insurers by phone that the policy form was being changed in July 2001, but didn't bother to document it in a follow-up e-mail or other formal way. He said it just wouldn't have been practical to document each call and coverage issue discussed when he was averaging 40 calls a day.
During testimony, he also said he never sent a copy of the Travelers form to the insurers because he was waiting for final terms to be hammered out with Travelers first. He said it was "industry practice" at that time to wait until a final form had been negotiated with the lead insurer before it was sent out to other insurers in the program.
Indeed, even a Sept. 24 fax by Patrick Mulhall, an underwriter at Employers Insurance of Wausau, one of the WTC insurers, to one of his colleagues seemed to back up this industry practice. In his fax, Mulhall said he never signed off on a policy form because he was leaving it up to Boyd on July 19 to get "the lead underwriter's feedback and then incorporate ours if needed" as is "customary."
During cross-examination, though, Boyd became evasive and contradictory in answering questions - similar to the posture he took when he spent five days on the stand last month when the insurers were presenting their case.
Boyd would be painfully slow - staring off into space for as much as a minute - before answering even basic questions, such as if he considered the WTC insurance program to be a "new account" for Willis.
Other times he was evasive. When questioned if he had a meeting with Carmela O'Neal, the underwriter for Federal Insurance, another WTC insurer, on July 31, he repeatedly responded "That is not correct."
When attorney Tom McKay, who represents Federal Insurance, reworded the question to ask about a "telephone conversation" with O'Neal that day, he responded "yes."
Form Changes
Boyd testified that he had told O'Neal about the form change in conversations on July 16 and 31. This contradicted testimony O'Neal gave last week, where she said Boyd had told her that Travelers Insurance would be using its own form, but never informed her that every insurer would be switched to this form.
Boyd said, "I hate to call her wrong. But she just recalls it differently."
McKay then asked if Boyd believed O'Neal would commit $254 million of her company's money based on a form that she had never seen and had no way of knowing what the terms and conditions were. "That is correct," said Boyd.
"Do you think that's custom and practice in the insurance industry, sir?" asked McKay.
"Sadly, it is," responded Boyd.
During afternoon testimony, attorney Stuart Cotton, who represents Lexington Insurance Co., another WTC insurer, also grilled Boyd over his statement that the form was switched on July 12. In previous testimony, Lexington's underwriter, Steve Carollo admitted that Boyd told him in a July 23 meeting that the Travelers form was being considered. However, he said he never received a copy of it to review. As a result, Corollo said he assumed his coverage was still based on the WilProp form when he signed the binder on July 23.
But Boyd told the court he had an earlier meeting with Carollo on July 19, where he told Carollo that the Travelers form would be the operative one. When Cotton asked him when and where this meeting took place, Boyd said that he couldn't remember the time of day, but that it occurred in a "corridor" in Carollo's office building.
When Lexington signed its binder to provide insurance coverage, Boyd said it made no mention of any form. However, Boyd said it was understood that it would be the Travelers one.
"Did you conclude Lexington was happy with the Travelers form that it had never seen?" asked Cotton.
"No issues were raised (about the form)," said Boyd.
"About the form it had never seen?" asked Cotton.
"That's correct," replied Boyd.
However, the court saw evidence that disputed the contention that Lexington bound on the Travelers form. On the binder, Carollo had made a number of handwritten notes requesting changes to wording found on the WilProp form. When Boyd protested that this was not the case, Cotton asked how Carollo could be requesting wording changes to the Travelers form when he'd never seen that form.
Boyd also appeared to contradict testimony he had given earlier in the trial. On Wednesday, he told the court that Willis and Silverstein made a decision on July 12 to move all insurers to the Travelers form to achieve "concurrency" with the overall insurance program. When asked if Travelers had insisted that every carrier switch over just because it wanted to use its own form, Boyd said, "not specifically."
Yet, last month during testimony, Boyd said Travelers had insisted that all of the carriers be switched over to the Travelers form.
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