1. L20: Case Study: WTC
Objective: review course material from perspective of WTC destruction (911)
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2. Basics about WTC Owned by Port Authority of New York and New Jersey
Opened in April 4, 1973
7 buildings in the complex
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3. More Info.
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4. Tenants of WTC Banks Financial services firms Law firms
Brokerage houses
Television stations
Publishers
Charitable organizations
Airlines…
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5. Facts about 09/11/01 attack
8:46 am, a Boeing ER going about 470 miles per hour (756 kph)--fractured as many as 36 perimeter support columns over a four-story area of WTC 1's north face.
9:02 am, a second plane, a Boeing ER flying at about 590 miles per hour (950 kph), inflicted similar damage on WTC 2. The collision fractured as many as 32 perimeter columns over a five-story area
Crash ignited plane’s fuel supply, causing fire at 2000 Fahrenheit
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6. Support structure
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7. Elevator system 198 elevators in total (Duplication-drawback?)
200 deaths due to trapped
in the elevators!
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8. RM Objectives Objectives of the firm Objective of RM
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9. Statistics
Total number killed in attacks (official figure as of 9/5/02):
Tons of debris removed from site:
Jobs lost in New York owing to the attacks:
Point drop in the Dow Jones industrial average when the NYSE reopened:
Estimated cost of cleanup:
Economic loss to New York in month following the attacks:
Estimated amount of insurance paid worldwide related to 9/11:
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10. RM Problems -- Exposures
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11. RM Problems -- Perils/hazards
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12. RM Problems–Direct Loss
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13. RM Problems–Financial Consequence
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14. RM Tools-Loss Control Examples
Following 1993 bombing, No mails can get to WTC w/o being checked elsewhere
Evacuation plan
Tenants (backup data)
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15. RM Tools--Loss Financing
Retention
Insurance
Primary insurance
Reinsurance
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16. More info on WTC insurance
Port authority of NY leased to Silverstein just prior to the attack on 7/24/2001 (99-yr lease, 120m/yr)
- Port Authority carried only $1.5 m (per occurrence) coverage
$3.55 billion property insurance with a retention of only $1.5 million per occurrence (broker: Willis)
25 carriers including Chubb Corp., Swiss Re. (22%), Allianz AG, Ace Ltd. And XL Capital Ltd., Travelers Indemnity Co.
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17. Questions about policy provisions—One or two occurrences
“Occurrence” shall mean all losses or damages that are attributable directly or indirectly to one cause or to one series of similar causes. All such losses will be added together… treated as one occurrence irrespective of the period of time or area over which such losses occur.
In the first phase of litigation, 10 insurers won – a coordinated terrorist effort resulting in a single event
In the second phase, Silverstein won, 9 insurers were judged liable for double limit – there were two separate attacks
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18. Questions about policy provisions-- War exclusions
Insurers will NOT pay for damage caused by:
war, including undeclared or civil war
warlike action by military force ….
insurrection, rebellion, revolution ….
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19. Questions about policy provisions-- Terrorism insurance
Government program for terrorism insurance
Terrorism Risk Insurance Act of 2002 (TRIA)
Insurers must provide coverage for loss resulting from acts of terrorism
10 billion per insurer deductible, 90/10 after deductible
Why have gov. program?
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20. RM Lessons Learned
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21. Importance of monitoring
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