07.26.06

Schumer To Ground Zero Insurers: Pay Up

Reports Indicate Some Insurers May be Using New Ground Zero Deal as an Excuse to Wiggle out of Required PaymentsSenator Sends Letter to Balking Ground Zero Insurers Urging Them to Make Good on Commitment Calls on Senate Banking Committee to Investigate

As a number of insurance companies that underwrote the World Trade Center have yet to categorically commit to provide the required insurance payouts necessary to rebuild the site, today Senator Charles E. Schumer sent them a letter prodding them to immediately make good on their commitments. Schumer believes that despite changes to the WTC plan under the new agreement between the Port Authority of New York and New Jersey and Larry Silversteins companies, the insurers of the Ground Zero site have a legal responsibility to make their payments, citing two prior judicial judgments that say that the Port Authority is in fact an insured entity.

Business as usual tactics like talking tough, threatening litigation and stalling are just not acceptable when it comes to rebuilding Ground Zero, Schumer said. The tragedy that begat this situation was an attack on our nation, making the effort to rebuild the site a national, and international imperative for New York and America. We have a plan to move forward, we have committed private and public stakeholders; what we dont have is explicit certainty from all the relevant insurance companies that they will make the payouts necessary to finance the rebuilding.

Though some of the companies have already honored their commitments to the site and others intend to honor their obligations, correspondences from some of the other companies make it clear that they may resort to tactics of delay and evasion that will seriously hamper, and perhaps even derail the rebuilding process.

In his letter to the insurers (including: Allianz, Gulf, Industrial Risk Insurers, Royal and Sun Alliance, TIG, Traveler's Indemnity, Twin City, Wausau and Zurich) Schumer wrote, Simply put, without this money New York will be left with giant holes at Ground Zero, so today I ask simply that you will not try to use the new conceptual agreement between the PA and SPI as an excuse or pretext for refusing to pay what your companies owe.

Implementing the Ground Zero rebuilding plan relies entirely on the ability of SPI and the PA to utilize replacement coverage proceeds to finance the rebuilding. Unfortunately, many of the insurance companies have taken issue with the new conceptual agreements, claiming that the realignment of interests may exempt them from paying out their policy. However, two prior judicial judgments regarding the World Trade Center insurance policies say that the Port Authority is in fact an insured party.

On April 26th, the PA and SPI reached a conceptual agreement on a rebuilding plan for the World Trade Center site. Under this plan, SPI will develop Towers 1 and 5, but will transfer ownership of these buildings to the PA. SPI will also develop Towers 2, 3 and 4, but will remain the owner in control of these buildings for the duration of their lease. This agreement was forged after thorough and careful deliberation by both the PA and SPI, and has received the backing of the Governors of New York and New Jersey, and the Mayor of the City of New York.

In his letter Schumer wrote: Let me be clear, nothing has changed about the tragedy of September 11th, nor has anything changed about the job that lies ahead to rebuild what was lost at Ground Zero. The new conceptual framework only alters the relationship between the PA and SPI: the buildings that were planned still need to rise and the insurance proceeds are still critical to meeting that goal. New York, and the nation, cannot afford to delay rebuilding at this critical juncture. Therefore, I urge you to immediately commit in writing to make good on your obligations so that the rebuilding can move forward. If, for some reason, you believe this cannot happen, I wish to meet with you to hear the reasons why.

Schumer forwarded the letters to the Chairman and Ranking Member of the Banking Committee, Richard Shelby and Paul Sarbanes, and asked them to investigate this matter. He said today that he is hopeful that these issues will be resolved in the immediate future, obviating the need for formal congressional inquiries.



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