New York Gov. Andrew Cuomo's administration is leaning on airlines and their insurers to settle a long-running lawsuit over the 9/11 attacks with World Trade Center developer Larry Silverstein, in a bid to help Ground Zero construction.

Mr. Cuomo's top insurance regulator, Benjamin Lawsky, recently warned airline insurers that the absence of a settlement has "undermined public confidence in the insurance industry and slowed redevelopment of the attack site."

People...