9/11 one event or two?

9/11 one event or two?

The 9/11 Terrorist Attacks on the World Trade Centre – were they One Event Or Two?

The UK High Court decision removed any uncertainty in the reinsurance market by upholding an arbitration tribunal’s decision that the terrorist attacks of 11 September 2001 on the Twin Towers of the World Trade Center (WTC) amounted to two “events” for the purposes of aggregation under a whole account catastrophe XL reinsurance wording. This was on 8 February 2013, in AIOI Nissay Dowa Insurance Company Limited v Heraldglen Limited and Advent Capital (No 3) Ltd [2013] EWHC 154,

The underlying losses principally arose from settlements for property damage and personal injuries claims made by the liability insurers of American Airlines (for flight AA11, which crashed into the North Tower), and United (for flight UA175, which crashed into the South Tower). Also claiming were the two security companies responsible for screening passengers on each flight. The issue was whether the losses arising from each act of hijack of the aircraft were one or two events under the reinsurance.

The case was reinsurer AIOI’s appeal from an earlier decision. AIOI maintained that its liability under the outward XL reinsurances was on a one-event basis, whereas Heraldglen had presented its claims to AIOI as two separate occurrences arising out of two separate events. The outward XL reinsurance contracts were subject to London Standard Wording 351, which provided that “each and every loss” is “each and every loss or accident or occurrence or series thereof arising from one event”.

The tribunal had decided that the losses arising were caused by two separate occurrences arising out of separate events. The High Court upheld this finding on the basis that the tribunal had

  1. correctly applied the law;
  2. had regard to all materially relevant matters; and
  3. did not take into account impermissible considerations.

In reaching this conclusion, the tribunal had taken into account the “four unities” test set out in the Dawson’s Field arbitration and adopted by Rix J in Kuwait Airways Corporation v Kuwait Insurance Co:

In this matter, the tribunal did take into account:

The decision will be welcomed as it confirms the view taken by the majority of the market and removes any uncertainty as to the number of events.