Which ruling do you agree with in this complex case? What is the justification for the ruling against the leaseholder in this case, and the one in favor of the leaseholder? Do you think this ruling is ethical in light of the massive loss?
1. Did the September 11 terrorist attacks on the World Trade Center constitute one loss or two? The resolution to this question is far from simple. Controversy surrounding this issue illustrates the ambiguities inherent in some business insurance contracts.
2. To address the underlying problem in the long-delayed loss settlement, Superintendent Dinallo issued a bulletin on October 16, 2008, requiring insurers to provide contract certainty for coverage agreements.
This contract certainty called for contract language in insurance policies to be firmed up within thirty days of issuance and the delivery of the policy before, on, or promptly after the policy's inception date.
This would ensure that policy provisions, like the question as to whether the destruction of the twin towers was one insured event or two, are definitively established before a loss. Insurance carriers were given twelve months from the date of Dinallo's bulletin to bring policies and procedures into compliance with the rule.
When asked by the Risk and Insurance Management Society (RIMS) what would happen if carriers failed to meet the compliance deadline, the New York Insurance Department responded that it would "consider regulations spelling out more detailed rules. Regulations have the force of law and penalties can be assessed on licensees."
Willis Group Holdings Chairman and CEO Joe Plumeri praised the contract certainty rule, saying, "There is absolutely no excuse for policies to be delivered months after their inception, an all too commonplace practice in this business.... We're in the business of keeping promises, and the insurance industry as a whole can do no less. We believe that the industry should police itself, take a principled approach to doing business, and adopt these measures as soon as possible."