Stabilizing the insurance industry key for economy
"Commerce will not be fixed until the insurance industry is fixed," said Blair Fensterstock, at a recent presentation sponsored by the T.E. Brennan Co. to local insurance and business leaders.
Fensterstock, of Fensterstock & Partners in New York, was the lead attorney on all of the civil cases after the World Trade Center was bombed in 1993. He was also standing 20 feet away from the World Trade Center buildings when the second plane flew into the south tower on Sept. 11, raining down debris, fire and people.
The insurance industry, clearly reeling from the attacks of Sept. 11, waits for Congress to pass legislation that will make the government become, in effect, a reinsurer should any more attacks occur on US soil.
Reinsurance is a way that insurance companies spread their overall risk should a catastrophe occur. After the attacks, reinsurance companies started excluding coverage related to terrorist attacks, and it has had a domino effect on insurance premiums. If the government steps in as a reinsurer, it would help in reducing rates.
One of the issues stemming from Sept. 11 is whether the two plane attacks on the separate towers constitutes one event, from an insurance perspective, or two. Fensterstock says it’s likely that the World Trade Center attacks will be ruled as two separate events versus one continuous event, due to New York state law.
"[The law says] that proper analysis is to look at the immediate physical cause of the loss, or approximate causation analysis of the causes nearest to the loss," Fensterstock said. "Under that analysis — and there have been about four of five cases that look at this — the causes nearest the loss will be interpreted as, I believe, two separate plane crashes in New York. It’s that simple."
The distinction is important for the buildings’ owner and operator because if viewed as one event, insurance would only pay out $3.6 billion, which is roughly the value of one of the towers.
"A lot of that money will go toward rebuilding the downtown," Fensterstock noted. "So I think New Yorkers and the rest of the world should root for ‘two occurrences,’ unless you’re on the insurer’s side of it."
Port Authority dropped the ball
Fensterstock spoke on a variety of topics related to the Sept. 11 attacks. The most eye-opening revelation is that the Port Authority of New York and New Jersey, which owned the World Trade Center buildings, received a report compiled by security and terrorist experts from the US, Israel and other countries, that stated that the World Trade Center was the most likely building to be attacked in the US.
The report was delivered in 1986, and at that time, the Port Authority did nothing to deter an attack, even though some of the solutions would have cost just $50,000.
"You can’t prevent anything that inevitably will happen, but deterrence is the way to send them someplace else," said Fensterstock.
But he did note that as a result of the 1993 attack, the Port Authority and World Trade Center developed various exit strategies in the event of another attack. It appears that those exit strategies saved thousands of lives on Sept. 11. For instance, in the case of the north tower — hit first — the plane hit between the 93rd and 98th floors; everyone below the 91st floor survived; those above it perished.
The 1993 bombing was deemed a failure by the terrorists who organized and planned it, and in their investigations of the bombing US officials found documents from the group indicating that their leader, Ramzi Yousef, in his own words, said, "We did not topple the building."
Said Fensterstock: "On Sept. 11 they finished the job that they started in 1993."
February 1, 2002 Small Business Times, Milwaukee
