The bitter legal battle over insurance for the World Trade Centre shows that the business of covering large risks has changed little since its parchment-and-quill-pen beginnings 300 years ago.
The industry's archaic practices - including hand-written notes for temporary cover and long contract delays - have been partly blamed for the dispute with World Trade Centre leaseholder Larry Silverstein, which could cost as much as $200 million in legal fees.
A US jury ruled last Thursday and on Monday to limit the liability of insurers led by Swiss Re in the disaster. But experts argue the trial need not have happened if insurers had simply issued the full policy before the September 11, 2001, attacks occurred - over two months after the cover was bought.
Worse, the process of agreeing and issuing policies has not improved and leaves the industry vulnerable to other expensive court battles over coverage because it is slow and laborious, critics say. "One would think the Silverstein case put the fear of God into everyone with a brain", said Paul Feldsher, Managing Director of Rossfield Advisors LLC, an insurance consultancy.
But a recent survey showed the insurance industry has not learnt the lessons of the World Trade Center dispute.
Allianz Global Risks, a unit of Allianz AG, revealed that 90 percent of brokers and large commercial insurance buyers surveyed said the accuracy and timeliness of insurance policies remained a problem and have not improved in the past three years.
SCRIBBLED NOTES, DELAYED CONTRACTS: The Silverstein trial turned up hand-written notes scribbled by underwriters in the margins of papers that were used as cover agreements until the full contracts were hammered out.
Thierry Van Santen, President of Ferma, an organisation for risk managers of European-based corporate giants who buy billions of euros of insurance cover each year, said he has not seen any improvement in the insurance market's performance since the legal havoc wrought by the September 11, 2001 attacks.
This year, Van Santen said some of his own policies took four months to be issued after the cover began, despite his demands to receive them within weeks - partly in response to the Silverstein dispute.
If that's not enough, he's still waiting to see the policy contract for one cover he bought over a year ago in 2003.
When they finally arrive policies can be littered with mistakes and may bear little resemblance to what the client thought he had bought, experts say. But market players assume old friendships can smooth over differences that may arise, in much the same manner as when Lloyd's started in a London coffee-house in 1688.
"It's an old cliche that insurance is a people business," said Feldsher. "Too often, deals are done with the assumption that personal relationships are the antidote to all problems. That just doesn't work anymore as many companies are publicly traded and coverage disputes involve huge sums of money."
The jury in the multibillion-dollar Silverstein trial decided in separate verdicts that most of the dozen or so insurers agreed to an insurance form that defined the destruction of the twin towers on September 11, 2001 as one event.
Lawyers for Silverstein argued that the insurers used a different form and that since the towers were brought down by two different plane crashes, he should be able to collect double on his roughly $3.5 billion policy.