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Willis facing explosive negligence dispute

The Texas office of global broker Willis is facing a multi-million-dollar negligence suit after an insurer refused to pay out following a botched demolition in California.

Explosives manufacturer Alpha Dyno Nobel is suing the broker after its liability insurer denied coverage for a number of personal injury claims stemming from a controlled demolition that went wrong.

Five people were injured after shrapnel from the explosion flew almost 1,000ft, injuring spectators who had gathered to watch the demolition of two boiler towers.

In the most serious incident a man nearly lost his leg after a piece of shrapnel cut through two chain-link fences and severed his limb, leading to extensive surgery and rehabilitation.

Willis placed a $1mn per occurrence general liability policy with a $2mn aggregate with Lancer Insurance Company. Above that it placed a $4mn excess policy with a panel of reinsurers.

Before the demolition, Alpha claimed that it had asked Willis to provide insurance certificates and clarification around wordings.

But following the botched explosion Lancer refused to pay out, claiming that it was not liable for risks related to explosives or the demolition of man-made structures.

In a complaint, filed in a California District Court last week (18 August), Alpha claimed that Willis's mishandling of its insurance placement could leave it exposed to multi-million-dollar liability claims.

Willis said that it "was sure" Alpha was properly covered for the sale of products used in the demolition of man-made structures, according to the complaint.

But Alpha said that Lancer had continued to take the position that it was not covered by the policy.

The explosives manufacturer and distributor claimed that it had been left exposed to substantial legal expenses and millions of dollars in liability payments.

Alpha suggested that it could face a portion of a $13mn arbitration settlement, which Lancer has refused to cover.

Willis inherited Alpha as a client after it took over the business of Summa Insurance Managers in 2013.

Willis declined to comment.

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