New York’s mayor Michael Bloomberg has recruited Warren Buffet’s holding company Berkshire Hathaway to take over a taxpayer fund that was formed to pay out claims arising from the clean-up of Ground Zero.
The plan, which is currently under review, would entrust Berkshire Hathaway with $270 million in federal funds. The cash remaining in the World Trade Centre Captive Insurance Company (WTCCIC) would be converted into a $600 million insurance policy.
As part of the deal, Berkshire Hathaway will take on the liability for fresh 9/11 health claims and other related litigation.
Warren Buffett, the second richest man in the US, heads the multinational, which manages a number of well-known brands and subsidiary companies.
The company recently reported a 29 percent surge in 3Q profits.
The WTCCIC was formed by the City of New York, with funding from the Federal Emergency Management Agency, in order to provide insurance coverage to the city and its contractors for claims brought about in relation to the clean up operation at Ground Zero.
Owing to the immediacy of the disaster, municipal agencies and private contractors responded without signing contracts or obtaining insurance coverage.
The claims that have been faced by the WTCCIC are partly a result of this necessarily rushed response.
Questions have been raised about the effectiveness of the captive. In 2006, Democrat Jerrold Nadler questioned why the captive opted to litigate every claim that was filed.
Articles in the American press have questioned the salaries and expenses of staff working for the captive
The change in the fund’s status from a not-for-profit insurance entity to a commercial venture is bound to be controversial given the politically sensitive nature of the issue.
