Only one trade centre tower insured
Only one of the twin World Trade Centre towers was insured because experts believed the chances of both collapsing simultaneously was too far-fetched, it emerged today.
The towers’ owners, the Port Authority of New York, will only receive an insurance payout of around £1 billion, far below the £3.3bn value put on the towers before Tuesday’s terror attack, it was reported.
A spokesman for the US Insurance Information Institute told the Guardian newspaper: ‘‘The possibility of the loss of both structures was seen as so remote that cover was not taken out on those lines.’’
Insurance analysts yesterday said the terrorist attack on the US would be the most expensive man-made disaster ever and could cost the industry up to £27bn.
Lloyd’s of London, the insurance market, would not comment on the extent of its exposure as it was still assessing the impact.
But analysts said the group would be hit hard as its aviation syndicates insure more than a third of the world’s planes.
Many Lloyd’s ‘‘names’’, wealthy individuals who make up a significant proportion of the Lloyd’s market, have unlimited liability which could bankrupt them if claims spiral.
Lloyd’s chairman Saxon Riley said: ‘‘The situation in New York and Washington is evolving continually. The global social and economic effects are just starting to be felt.
‘‘Any calculation of the total losses so soon after the event can only be deeply flawed.’’
Analysts said the terrorist attack would be far worse than Britain’s most expensive disaster involving the Piper Alpha oil rig in 1988, which cost the industry £3bn.
Others said the scale of costs could be double those caused by Hurricane Andrew in 1992 when the industry paid out around £13.5bn.
Richard Shaw, pan-European insurance analyst at Credit Lyonnais Securities, warned the full cost of the disaster was likely to be far higher than the initial estimates.
He said: ‘‘It will take a long time for the full extent of the cost to be known. It is going to be higher than 15bn (£10bn) and it could be higher than 40bn (£27bn).’’
But insurance groups and analysts rejected suggestions that acts of terrorism may be excluded from policy cover, saying that while this was common practice in the UK it was unlikely to be the case in the US.
Mr Shaw said that the fact that companies were already giving estimates of the cost suggested there was no terrorist exclusion clause.
