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DUSSELDORF, Germany -- German airports are reviewing their property risk management procedures after a court ordered Dusseldorf Airport GmbH to return 20 million deutsche marks ($11.3 million) to insurers that had paid business interruption claims to airport tenants resulting from an April 1996 fire.
In the first of several expected subrogation cases by insurers against the airport, a regional court last week found the company guilty of gross negligence. The April 11, 1996, fire killed 17 people and injured 87 (BI, April 15, 1996). The airport's attorneys are reviewing its coverage to see if liability insurance would respond to the award, an airport spokesman said.
However, airport liability insurer Provinzial A.G. says the airport is not insured for the damages, because so-called performance liability damages are excluded from the company's liability policy. Performance liability results from the failure of the policyholder to fulfill contractual obligations, such as the lack of access to airport restaurants and businesses. The insurer said this coverage was available by endorsement.
Even if the airport had purchased the additional coverage, however, German law prohibits liability insurance from covering gross negligence.
The Dusseldorf court found the company was grossly negligent in using flammable insulation material in the construction of the airport. Polystyrene panels rapidly spread the fire after it was ignited by sparks from a welding crew, whose company was fined 5 million deutsche marks ($2.8 million) by the court for negligence.
The court also found that Dusseldorf Airport GmbH failed to inspect the welding crew's working area to determine the risk of a fire.
The spokesman for Dusseldorf Airport said the company has not decided if it will appeal.
The court ruling came in a case filed by insurance companies representing restaurants and other businesses at the airport that sustained business interruption losses from the fire. The court dismissed the director of the airport's building division from the case.
Last April, Dusseldorf Airport and its six lead property insurers agreed to a settlement of 245 million deutsche marks ($138 million) for property damage resulting from the fire. The property insurers canceled the airport's coverage after paying the claim, and the airport found new insurers.
Total property damages at the airport are estimated at 350 million deutsche marks ($197.1 million), while the overall cost of rebuilding the airport is about 2 billion deutsche marks ($1.13 billion).
Meanwhile, a liability insurance pool for aviation victims is paying a total of 20 million deutsche marks ($11.3 million) to the estates or families of 17 people who died in the blaze. Luftpool, comprising 90 liability insurers, paid the claims.
Dusseldorf Airport GmbH still faces a subrogation suit filed by insurers of airlines seeking to recover more than 130 million deutsche marks ($73.2 million) in business interruption losses they incurred from the airport's shutdown during the blaze.