“Lady Rona Delves Broughton was in the back seat of a London taxi on Sept. 11 when she learned that two jets had crashed into the World Trade Center. It took her about a minute to realize she had a serious financial problem on her hands. So far, she has written personal checks totaling nearly $3 million to cover her share of insurance liabilities for the terrorist attacks,” writes James Hagerty in today’s Wall Street Journal.

“It isn’t only big insurance companies that are paying for the estimated $40 billion of damages from Sept. 11. People such as Lady Delves Broughton pledge their entire fortunes to back insurance policies sold at the 300-year-old Lloyd’s of London market. They cover such things as oil rigs, airplanes and, it turned out, New York’s Twin Towers.”

“To pay for her Sept. 11 losses, Lady Delves Broughton, who says she is in her 50s but won’t divulge more, has suspended renovations of her crumbling country mansion and taken out a bank loan, using her house on London’s posh Kensington Square as security. She says she sometimes asks herself, ‘Who am I to be insuring the World Trade Center?’ “

“It’s a question heard often these days around Lloyd’s. Some in the London insurance business argue that Lady Delves Broughton and other wealthy ‘names,’ as they are known, should no longer be allowed to invest in the market on terms of unlimited liability, meaning that they are obliged to sell almost all their assets, if necessary, to pay claims. But despite the huge risks, most names aren’t ready to retreat.”

“Sept. 11 demonstrated the peril of backing insurance at Lloyd’s, but it also helped push premium prices way up. Terrorism and war-risk coverage for a ship valued at $500 million now costs about $500,000 a year, or four times as much as a year ago, according to Christine Dandridge of Atrium Underwriting PLC, who sells such insurance at Lloyd’s. Investors at Lloyd’s are expecting bumper profits over the next few years, barring catastrophic new eruptions of terrorism.”

” ‘We’re gambling for very high stakes now,’ says Lady Delves Broughton, as white-jacketed waiters clear away the remains of lunch at Le Gavroche in London. ‘We’re desperate to get our money back — and we believe we will.’ “