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Insurability of Punitive Damages -- Texas Style
It's not as if the only cases I read these days are from the former independent nation of Texas, but the Texas Supreme Court is on a roll in clearing out its backlog of important insurance cases, some involving additional insured coverage (and here), and a new important decision on the insurability of punitive damages.
One of the great myths in the insurance industry is that punitive damages are not insurable. This is false, particularly considering that the majority of US jurisdictions allow coverage for punitive damages at least in some circumstances. The argument against coverage in premised on the notion that it would undermine the deterrent effect of imposing punitive damages were the defendant able to in turn seek insurance recovery. A century ago the same debate in the same terms was had over whether liability insurance policies were themselves contracts violative of public policy, since it would undermine the deterrent effect of imposing tort liabiltiy were the defendant able to in turn seek insurance recovery. See Mary McNeely, Illegality as a Factor in Liability Insurance, 41 Col. L. Rev. 26 (1941) (an excellent early analysis of some of these questions). As McNeely wrote three score years ago, "Throughout its history the insurance device has been alternatively hailed as a promoter of communal welfare and damned as a generator of evil."
So too is framed the interesting recapitulation of these familiar polarities from the majority and (main) concurring opinions in Texas. Fairfield Ins. Co. v. Stephens Martin Paving LP (Texas Feb. 15, 2008).
What I would add is that the data and more rigorous theoretical analyses do not suggest there is a major "moral hazard" problem in liability insurance, see C. Heimer, Reactive Risk and Rational Action: Managing Moral Hazard in Insurance Contracts (1985). And courts should not assume a set of governing facts without evidence (for given the data here the easy assumption that allowing indemnification "encourages" misconduct is surely problematic and not a proper subject for judicial notice). This is not to suggest that there isn't lazy underwriting -- insurers should vet their potential insureds to see if they might be the kind of of folks or companies to engage in misdeeds. But as the Texas majority holds, the principle of freedom of contract should allow whatever coverage is provided by the contract terms -- and if insurers do not want to cover punitive damages in their policies, they can say that.
Posted by Marc Mayerson at February 18, 2008 3:59 PM | Add New Comment
Cleaning Up the Mess in Texas: Insurer Funding Payment of Liability Claims When Coverage Is Doubted
In May 2005, the Texas Supreme Court unanimously held that a liability insurer that voluntarily settles a claim against an insured may recover the payment against its own insured if it proves that the claim is uncovered and it reserved its right to seek recoupment. The Texas Supreme Court, while unanimous in result, was badly splintered in rationale.
Two years ago, the Court granted rehearing. Yesterday, the Court changed course, with a majority ruling that an insurer does not have a unilateral right or an equitable claim to recover a settlement payment. Excess Underwriters v. Frank's Casing (Tex. Feb. 1, 2008). The court reaffirmed its prior decision in Matagorda County, which barred a primary insurer from seeking recoupment of defense cost. Recent case law in other jurisdictions have split on the issue, but the more robust recent opinions (Illinois, Massachusetts, Wyoming) line up with Texas.
Posted by Marc Mayerson at February 2, 2008 9:03 AM | Add New Comment
The Covenant to Provide Notice: Materiality or Prejudice Needed To Refuse Payment
Sometimes courts get it right, both analytically and in the result. This was true in the landmark decision of the Texas Supreme Court in PAJ, Inc. v. Hanover Insurance Co. (Texas Jan. 11, 2008). In this case, the Texas court holds that “an insured’s failure to timely notify its insurer of a claim or suit does not defeat coverage if the insurer was not prejudiced by the delay.” While I agree with the holding, what may be more significant is the court’s adoption of the right analytical approach, specifically, considering the notice provision as covenant whose breach discharges the insurance company’s performance only where that breach constitutes a material breach of the contract.
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Posted by Marc Mayerson at January 16, 2008 2:09 PM | Add New Comment
A Dog in the Fight: Policyholder Interest in Inter-Insurer Disputes
When an insurer pays a policyholder’s claim, the insurer sometimes seeks to off-load that payment “vertically”, that is, by suing other insurance companies that issued lower-layer coverage, or “horizontally”, that is, by suing other insurance companies that issued coverage in other policy periods.
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Posted by Marc Mayerson at October 15, 2007 10:05 AM | Comments (1)
The "Insurance Hoax" -- Insurers Paying Too Little and Too Late
Bloomberg recently published a hard-hitting piece decrying the property-casualty industry's claims-handling practices. Insurers perceive that the article to punches below the belt, as this response from the Insurance Information Institute shows. The III piece is interesting to me because of its immoderate tone, something at odds with most of the writing that comes from III, which is a great source of financial statistics in particular on the performance of the P-C insurance industry. While the III is certainly right that insurers pay claims every day, the III and the rest of the industry need to recognize the wide-spread perception that at the point of claim insurers adopt an adversarial posture. Experienced, thoughtful observers of the industry have written about this at length (and the linked article is I think the most important thing ever written on the P-C industry), and the point of first-party insurance bad-faith law in part is to counterbalance the power imbalance that insurers hold over their insureds at the time of claim -- at the time their insureds are most in need and dependent on their performance, which explains the emotional oomph that typifies through-the-eyes-of-insureds' reporting on insurers' claims-paying (or claims-denying) practices.
I agree with the III that the Bloomberg story is too facile, and it is inappropriate to leap from the observation that an insurer paying less than what the policyholder wanted ineluctably means that the insurer is paying less than what the policyholder deserved. I recently suffered a major homeowners' loss when a (crazed) intruder broke into my home and caused huge amounts of damage; our insurer was fantastic in dispatching someone to board up a broken door, arrange for a contractor to do repair work, and reimburse us for other loss (including paying the vendor of our choice on some home electronics). So I know first hand that insurers can ride to the rescue, treat their customers with "good hands," and live up to their advertising slogans. On the other hand, I bring suits against insurers on behalf of clients when I think amounts are owed and unpaid, and I am kept busy by wrongful denials by insurers inflicted against my corporate clients (both large and small). At a time when respected news outlets like Bloomberg (and CNN and PBS) feel comfortable producing pieces that seem well suited to the Fight Bad Faith Insurance Companies website, the insurance industry should look deep into its practices and understand the perceptions of consumers and businesses to ensure that insurers' historic mission of helping their insureds, being "there" in the time of need, is embraced and, more importantly, put into practice every day in paying claims.
Posted by Marc Mayerson at August 30, 2007 1:06 PM | Comments (6)
Product Recalls
Product-recall expense can prove increasingly expensive in this time of international distribution, just-in-time inventories, far-flung shipping, and the like. Of course, the current poster child is Mattel, which seems to be doing a very good job in managing the recall of some of its Chinese-made toys. Policies today routinely seek to exclude the cost of product-recall expense, which can be staggering and life-threatening to a company -- both in terms of cost and perhaps more importantly in reputation of the producer. Speciality policies exist to deal with various types of recalls, and there has been litigation concerning product-tampering coverage and the more traditional liability insurance coverage and the scope of the product-recall exclusion (known in the trade as the "sistership" exclusion). The current wave of recalls involving Chinese-made products may well stimulate demand for this product, but I would not be surprised to see provenance exclusions developed or warranties required from assured as to quality control and quality assurance from their foreign contractors.
Posted by Marc Mayerson at August 29, 2007 11:55 AM | Add New Comment
A Man, A Plan, A Canal -- A Flood
No one should be surprised that the United States Court of Appeals today reversed the decision of the Louisiana District Court on whether losses occasioned by rising water in New Orleans was the result of a "flood" and thus excluded from coverage under several different forms of "flood" exclusion. The case, In Re Katrina Canal Breaches Litigation (5th Cir. Aug. 2, 2007), centered on whether the negligence in the design and construction of the levees that allowed water to escape from the protective flood-control system should be considered to be the operative event for insurance purposes, such that the water damage resulting cannot be said to have arisen from a "flood." The Fifth Circuit ruled that "even if the plaintiffs can prove that the levees were negligently designed, constructed, or maintained and that the breaches were due to this negligence, the flood exclusions in the plaintiffs' policies unambiguously preclude their recovery."
Continue reading "A Man, A Plan, A Canal -- A Flood"
Posted by Marc Mayerson at August 2, 2007 3:43 PM | Comments (2)
Blawgworld 2007
I am gratified to report that Insurance Scrawl was included in Blawgworld 2007, a very lengthy "e book" in .pdf format that collects a number of articles or blog entries from 2006 for inclusion in one handy collection. My contribution, originally published here, concerns the role in bad-faith cases of coverage counsel who manages a claim, focusing on the question whether counsel is a necessary trial witness and disqualifies him or her from continuing to represent the client. The piece further discusses whether the back-and-forth between a policyholder and its carrier -- even where conducted outside-lawyer to outside-lawyer -- constitutes evidence admissible at trial of the bad-faith claim, even if the inaptly called "settlement privilege" would preclude its introduction as evidence on the principal contract claim regarding coverage. I selected the piece for inclusion in this collection because I thought it highlights an interesting and different angle that reflects some of the intellectual ground I try to stake out marrying granular detail of doctrine with the practicalities facing lawyers in this field. I'm please to remind previous readers of the piece as originally published and to introduce new readers to it.
No doubt that any collection such as BlawgWorld will omit many fine commentators, but I take as the project's point more to show off the range and diversity of this newer forum for discussion writ large and to encourage lawyers -- who strike all of us legal bloggers as ideal readers and competitors -- to take advantage of the considerable benefits these vectors of communication present. I certainly spend at least 30 minutes a day cruising through various blog entries in the US, UK, and Canada, as well as news sources that utilize an RSS feed, to keep up on the most current developments and to stimulate my own thinking. I find this work is more effective at keeping up to date on legal developments than just about any other mode of communication, and the manner in which people write in BlawgWorld makes ingesting that information easy.
You are cordially invited to find materials in which you have an interest -- and if the right stuff does not already exist out there then, by gum, you've got the tools via blogging to start your own printing press too and get into and shape the conversation, the practice of law, public policy, and court decisions, too.
Posted by Marc Mayerson at July 30, 2007 10:41 PM | Add New Comment
Discovery of NMA Wordings for Lloyd's Policies
One difficulty in pursuing London market insurance recovery has been putting together what the actual wording of the insurance contract was. While there have been efforts afoot to move toward "contract certainty," that is, to finalize the actual wordings in advance of the effective date of the policy, this aspiration seems to remain elusive in implementation. As a result, what one usually has is a "slip," which is essentially a commitment to contract where syndicates at Lloyd's indicate the proposed share the syndicate is willing to accept in the proposed policy (as indicated by the underwriter's "scratch", i.e., initials or imprimatur) and a general statement of what the policy wording is expected to be (a list of major terms, exclusions, and the like).
Continue reading "Discovery of NMA Wordings for Lloyd's Policies"
Posted by Marc Mayerson at July 13, 2007 9:09 AM | Comments (1)
On Suits and Prophylactics: Recurring Environmental Coverage Issues
Commercial general liability policies provide coverage for the insured’s liability for “damages” on account of bodily injury and property damage and require the insurer to provide a defense to “suits” seeking such damages. Since the beginning of the environmental liability coverage wars some twenty-five years ago, insurers have disputed whether their insureds’ environmental liabilities seek to impose “damages”, are on account of “property damage,” and are adjudicated in the context of “suit[s].” Recent cases have continued to address these recurring issues.
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Posted by Marc Mayerson at May 22, 2007 12:31 AM | Comments (1)
Odoriferous Occurrence
Anaerobic decomposition produces among other things hydrogen sulfide gas. It is this gas that makes flatulents distinctive from, shall we say, the bouquet of a rose. This was illustrated in a recent coverage case involving a Minnesota pig farm that created a concrete lagoon with capacity to hold 1.5 million gallons of manure. Three-quarters of a mile away was a neighbor’s home.
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Posted by Marc Mayerson at May 21, 2007 2:04 PM | Add New Comment
Appraising Appraisers and Appraisals
In many property-insurance policies, a party has a right to demand an appraisal, which is procedure in which the value of lost or damaged property is determined. Typically, an appraisal takes the form of what I call a 1 + 1 + 1 structure – each party appoints its own appraiser, and if the two party-appointed appraisers cannot agree on a number the two together then select an umpire (or a court will select an umpire to decide if the two cannot agree on one). That some form of alternative dispute resolution is used for valuation, however, does not mean that there is no room for judicial intervention in disputes involving insurance policies with appraisal provisions.
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Posted by Marc Mayerson at March 2, 2007 11:51 PM | Comments (7)
Does a Court's (Reversed) Disparagement of the Policyholder's Coverage Claim Alone Eviscerate Its Bad-Faith Claim?
A common enough scenario in a liability-insurance case: the parties file cross-motions for summary judgment, with the insurer arguing it has no duty to defend. In Acme United Corp. v. St. Paul Fire & Marine Ins. Co. (7th Cir. Jan. 9, 2007), the question presented was whether an advertising injury liability insurance policy provided coverage for a suit against the insured for product disparagement. In Acme, the district court accepted the argument of the insurer, thus cutting off the ability of the policyholder to obtain recovery of the defense costs it had run up. Where, as here, the appellate court reverses and finds coverage, does the district court's now-reversed ruling effectively impale the policyholder's bad-faith claim?
Posted by Marc Mayerson at February 18, 2007 11:02 PM | Comments (2)
Insurers' Duty to Defend their Insureds Against Intentional Torts
The duty to defend undertaken by an insurance company is an essential component of the “peace of mind” coverage provided by liability insurance protection. Given the breadth with which the duty to defend is ordinarily construed by the courts, the defense-cost coverage of a policy is also referred to as “litigation insurance,” that is, insurance against the risk and burden of suits brought against the insured. Disputes have raged over whether that litigation insurance applies, however, to suits against the insured alleging an – or only – intentional tort.
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Posted by Marc Mayerson at February 10, 2007 11:52 PM | Comments (3)
Cone of Silence or Echo Chamber: A Policyholder’s Privileged Communications and its Insurers
An insurance company that receives a claim from one of its policyholders inevitably wears both a white hat and a black one. The insurer is there to help its insured deal with the claim – it may dispatch claims handlers or service providers to help the policyholder in its time of need; the insurer, however, also is the insured’s adversary in the sense that it must determine whether it has any obligation to pay the insured. To the latter extent, the insured and the insurer have directly adverse interests. (The law of first-party insurance bad faith is predicated on the recognition in part of this fundamental adversity of interests between the insurer and its insured, especially at the precise moment when the insured is calling upon the insurer for performance.)
The insurer’s wearing two hats poses the opportunity for mischief when those roles get confused or blurred. Take the example of a defense lawyer hired by an insurance company to defend the insured: the defense attorney plainly has an attorney-client relationship with the insured, the touchstone of which is confidentiality. Assume that the defense lawyer is told a fact by the insured that supports the insurer’s denying coverage: the insured confesses to being drunk while driving, the insured acknowledges that it knew of a latent problem before it purchased the policy, or the insured knew of the potential claim against it for a long time but had simply hoped it would go away and so did not notify the insurer sooner. The insurance company might wish to learn of this fact because it might permit it to terminate its defense obligation and avoid paying anything on the claim. In these circumstances, may the defense counsel tell the insurance company about this admission from the insured?
Posted by Marc Mayerson at January 21, 2007 4:08 PM | Comments (8)
‘Round and ‘Round the Tort Liability Goes – When It Stops, Whither the Insurance Chose?
Generally, the law allows “choses in action” to be alienated (sold). This is a change that has been adopted over the course of the last 100 years or more. See W.W. Cook, The Alienability of Choses in Action, 29 Harv. L. Rev. 816 (1916). Because claims under insurance contracts properly viewed are choses in action, (Black’s Law Dictionary (5th ed. 1979) at 219), most courts have allowed insurance claims to be sold, too, even when the transaction takes the form of an “assignment.”
Posted by Marc Mayerson at December 26, 2006 6:02 PM | Comments (2)
Caveat Advocat: Defense Lawyers as Coverage Lawyers
While insurance-coverage law has developed over the last 20 years into a rarefied specialty practice, lawyers who handle the defense of liability cases cannot punt on considering coverage issues – or they risk malpractice claims by their disgruntled clients. The New York Appellate Division recently confirmed that defense counsel may be exposed for failing to investigate the possibility of coverage – even where defense counsel has been retained by another insurance company for the benefit of the insured defendant.
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Posted by Marc Mayerson at December 23, 2006 6:03 PM | Comments (1)
Now You See It, Now You Don’t: Payments Received from Insolvent Insurers
Insurers collect premiums, invest them, incur overhead, and pay claims. Sometimes this life cycle gets out of whack, leading to the voluntary or forced insolvency of an insurance company. Whenever an insolvency occurs, one job of the rehabilitator or liquidator is to equitably distribute whatever money is available to the policyholders with unpaid claims in the queue. And a policyholder that already received payment from the insurer may be required to disgorge those monies back to the estate if it is found that the claim payment constitutes a preference.
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Posted by Marc Mayerson at November 17, 2006 1:10 AM | Comments (1)
Trigger and Allocation for Asbestos, Other Bodily Injury, and Property Damage: Recent Cases and the Policyholders' Winning Argument
“Who pays” and “how much” continue to be central questions in insurance-recovery litigation by policyholders for asbestos, environmental clean up, pharmaceutical, lead-paint, toxic-tort and other conditions that produce loss over time. Because insurance contracts are governed by state law, the coverage wars apparently will continue until each inch of turf is won or lost. Most recently, the Delaware Supreme Court has weighed in on the question of trigger of coverage (“who pays”) for asbestos- liability claims, the Minnesota Supreme Court has addressed allocation of loss (“how much”) among triggered policies, and the New Hampshire Supreme Court has now been asked to address the allocation question, too.
Posted by Marc Mayerson at October 26, 2006 4:24 PM | Comments (4)
Berkshire Hath A Way Out for Equitas and Lloyd’s
A long-rumoured transaction between Equitas and Warren Buffett’s Berkshire Hathaway has been announced. This will be a two-step transaction whereby (1) Equitas will be absorbed into a National Indemnity Company subsidiary in exchange for a cash payment and a promise of providing additional reinsurance and (2) a channeling injunction will be obtained cutting off the exposure of Equitas, Lloyd’s, names, and Berkshire beyond the money in the new vehicle. If consummated, the deal will achieve the long-sought finality for names (the individual investors on the responsible pre-1992 syndicate years of account) and for the current Lloyd’s enterprise.
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Posted by Marc Mayerson at October 20, 2006 1:58 PM | Comments (11)
Berkshire Hath A Way Out for Equitas and Lloyd’s
A long-rumoured transaction between Equitas and Warren Buffett’s Berkshire Hathaway has been announced. This will be a two-step transaction whereby (1) Equitas will be absorbed into a National Indemnity Company subsidiary in exchange for a cash payment and a promise of providing additional reinsurance and (2) a channeling injunction will be obtained cutting off the exposure of Equitas, Lloyd’s, names, and Berkshire beyond the money in the new vehicle. If consummated, the deal will achieve the long-sought finality for names (the individual investors on the responsible pre-1992 syndicate years of account) and for the current Lloyd’s enterprise.
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Posted by Marc Mayerson at October 20, 2006 1:58 PM | Comments (11)
The Duty to Defend Class-Action Claims (Before a Class with Covered Claimants Is Certified)
A liability insurer’s promise to defend its insured is at the core of the protection purchased by policyholders and, in most states, the insurer will be required to defend any suit alleging facts that possibly could result in a judgment against the insured that would be covered by the policy’s duty to indemnify. A duty to defend will be found where the undisputed facts surrounding a claim – typically the language of the policy and the allegations of the complaint – permit proof of a claim potentially covered by the duty to indemnify. The complaint-allegations test, or what some jurisdictions term the eight-corners rule, results in the duty to defend being found by courts easily, commensurate with the broad contract language and the policy’s intention to afford the insured “litigation insurance” protecting against the risk and burden of litigation.
In any given liability case, the insured defendant might win, in which event no indemnity would be required, or the insured defendant might lose the case on a ground that is outside the scope of coverage; nothwithstanding the possibility of results where the insurer will not have a duty to indemnify the policyholder, the insurer still has a duty to assume the defense, which matures at the outset of the liability case. Because the duty to defend arises based on the possibility of the duty to indemnify a complaint, rather than based on a prediction of the likely outcome or indeed the actual outcome, we typically say that the duty to defend is broader than is the duty to indemnify.
Although an insurer's duty to defend will be triggered if the allegations raise the possibility of a duty to indemnify, sometimes
the complaint is unclear whether nestled within the allegations is a potentially covered claim. An interesting take on the issue arose in a recent Eleventh Circuit decision, Hartford Acc. & Indem. Co. v. Beaver (11 Cir. Oct. 16, 2006).
Posted by Marc Mayerson at October 18, 2006 5:10 PM | Add New Comment
Trial Graphics in Insurance-Coverage Cases: Advocacy with Data and Pictures
A picture may be worth a thousand words, but trial lawyers do not have a set of ready principles for the development of the pictures – graphics – we use at trial. A bulleted-list of points displayed in PowerPoint is hardly a substitute for a well-designed graphic that communicates to the jury. Where allowed by the budget, lawyers will work with trial-graphics firms to assist in making pretty pictures. But the case should remain that of counsel, which means that counsel must take responsibility for the development of graphics for trial.
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Posted by Marc Mayerson at October 8, 2006 2:16 PM | Comments (9)
What An Underwriter Wants: D&O Insurance Submissions and the Hunt for the Virtuous Insured
The negotiations of directors’ and officers’ policies tend to follow a bit of a different pattern from that in other lines of insurance, and the reason for this is plain: the insureds under these policies include the most important individuals at a company who are trying to cover their own assets. D&O negotiations for sophisticated companies often will involve not only price negotiations but an unusual amount of negotiations over wordings, too.
Posted by Marc Mayerson at September 15, 2006 9:43 AM | Comments (1)
Jury Instructions in Insurance-Coverage and Insurance Bad-Faith Cases
There is no formbook of jury instructions for complex insurance-coverage disputes, and even were there such a tome at best it would be a point of departure and not the destination. Complex insurance coverage disputes are marked by factual uncertainty, difficult legal terrain, and close parsing of issues. One mistake that lead counsel often makes in my view is not to personally take ownership of the jury instructions and instead delegates their preparation to the junior member of the team. Ultimately, it is the jury instructions that determine the case – and the appeal. Thus, it should be the responsibility of lead trial counsel to be intimately familiar with the drafting, submission, and argument over instructions to the jurors.
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Posted by Marc Mayerson at August 31, 2006 12:17 PM | Comments (1)
Conflict of Laws and Insurance Disputes: Choice of Law or Choice of Outcomes?
Most insurance policies are silent as to which state’s substantive law governs their terms. As a result, insurance-coverage lawyers often find ourselves deep into the world of choice of law and conflict of laws, a subject most of us sidestepped in our law-school education. Conflicts issues are (largely) untethered from the merits yet can be outcome determinative, so it is crucial to understand and focus on choice-of-law principles in complex insurance disputes, which can yield the application of different state laws within a single case to issues of contract formation, performance, and bad faith.
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Posted by Marc Mayerson at August 22, 2006 5:39 PM | Comments (3)
Additional Insured?: Defense Assured
Companies that work with each other share insurance through adding the other company as an “additional insured” in connection with their work together. Sometimes it is not clear that the claim falls within the scope of additional-insured coverage. The New York Appellate Division recently confronted whether an insurer had a duty to defend in those circumstances, answering the question that it does. BP A.C. Corp. v. One Beacon Ins. Group, 2006 NY Slip Op. 05297 (N.Y. App. Div., 1st Dept. July 6, 2006).
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Posted by Marc Mayerson at July 10, 2006 4:53 PM | Comments (3)
Equitas Financials -- 2006 Version
As part of the Reconstruction and Renewal of Lloyd’s in 1996, various participants in the Lloyd’s enterprise established several companies for the purpose of reinsuring the then-open syndicate years of account and managing the runoff of claims under those and prior years’ insurance policies. In 1997, the liabilities of a Lloyds’ owned-entity called Lioncover were reinsured into Equitas too.
Equitas issues an annual report and accompanying press release that discusses its results to date. Some of the highlights this year:
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Posted by Marc Mayerson at June 29, 2006 2:16 PM | Add New Comment
Running Out of Time: Statute of Limitations for Liability Insurance Policies
Liability-insurance policies were introduced in 1881, yet there is no great certainty in most states as to when the statute of limitations commences for bringing suit on an insurance policy for performance. Somewhat complicating matters – and simplifying it too – is the availability of declaratory relief, a remedy designed in part to pull insurance disputes into court. So to understand the application of statute of limitations in this context, one must draw distinctions among several concepts: (i) anticipatory repudiation of contract, which is considered a present breach of contract; (ii) anticipatory relief of seeking a declaration of rights before breach of contract; (iii) continuing breach of the duty to defend by an insurer; and (iv) breach of the duty to indemnify. The Alaska Supreme Court recently confronted these issues and elected to follow the California Supreme Court's approach to the questions presented.
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Posted by Marc Mayerson at June 13, 2006 3:36 PM | Add New Comment
Discovery of Other-Insured Claim Files in Insurance and Bad-Faith Disputes
Among the typical skirmishes in insurance-coverage litigation is the scope of discovery. In seeking discovery in insurance-coverage cases and for insurance bad-faith claims, policyholders seek information from insurers about the underwriting of the policy at issue and the carrier’s handling of the policyholder’s claim for coverage. Disputes arise once the policyholder moves beyond those materials to information showing the general practice of the insurer, how the insurer’s response to the particular insured compares with how it has handled other claims, and the insurer’s own understanding of the policy language as evidenced through claims-handling manuals, training materials, and other types of interpretative aids. See generally Saldi v. Paul Revere Life Ins. Co., 224 F.R.D. 169 (E.D. Pa. 2004); Colonial Life v. Superior Court(Perry) 31 Cal. 3d 785 (1982); Carey-Canada v. Cal. Union Ins., 118 FRD 242 (D.D.C. 1986). One recurring subject has been other-claims information, that is, information in claim files dealing with other insureds.
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Posted by Marc Mayerson at June 5, 2006 5:05 PM | Comments (2)
Late Notice by Liability Insurance Policyholders as Excuse Not to Pay – of Notice, Covenants, Conditions, Material Breaches, Innominate terms, and American versus English Law
Courts continue to struggle with claims where the policyholder may not have provided notice as soon as one might have liked, and the coverage litigation typically centers on whether the dispositive argument is “no harm, no foul” -- that is, policyholders will argue that coverage is not lost unless the insurer has been prejudiced in some fashion from the allegedly “late” notice. The Illinois Supreme Court and a Texas appellate court both have confronted this question recently, and these are largely consistent with recent holdings from New York’s highest court finding that the notice provision must be enforced as written – no ifs, ands or buts.
Posted by Marc Mayerson at May 27, 2006 10:13 PM | Comments (5)
Taming the Lion(cover): Lioncover, Lloyd's, Equitas, and the Central Fund(s)
W. Mark Felt or Hal Holbrook playing him said to "follow the money," which has proven difficult in the instance of Lloyd's of London, and a task made all the more important as asbestos and environmental liabilities continue to fall upon corporate policyholders in the US that purchased broad insurance in the 1950s, 60s and 70s through the London market. While lawyers and policyholders may be familiar with Equitas, the reinsurance runoff and claims-handling vehicles set up in the late 1990s to deal with liabilities arising under historical Lloyd's policies, I have long believed that a key for litigators is something called Lioncover, a reinsurance vehicle originally set up to bailout important players at Lloyd's who were involved in Peter Cameron Webb "managed" syndicate years of account. Lioncover, which I understand to be a wholly owned subsidiary of the Corporation of Lloyd's and which houses the PCW business, initially was not reinsured into Equitas when Equitas was set up as part of the "Reconstruction and Renewal" of the Lloyd's operation. It was later poured into the Equitas structure but also is explicitly backed by the Lloyd's enterprise itself. Lioncover is a lever one can use to uncover the financial vehicles backing old Lloyd's policies (which contra to popular myth are not backed solely by the assets of Equitas or by the trust funds in the US). Lloyd's annual report for 2005 contains a few interesting crumbs worthy of note for Lloyd's/Equitas watchers.
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Posted by Marc Mayerson at May 17, 2006 12:54 PM | Comments (1)
ACE's "Plea Agreement" with Law Enforcement and Regulators
Law enforcement, insurance regulators, and insurance-industry participants continue to collide regarding "contingent commissions" and bid rigging that occurred in US insurance markets in the 1990s and '00s. One insurer, Liberty Mutual, says it would rather fight than switch, and it has announced it will defend litigation brought by state attorneys general and insurance regulators. Most other insurers have sought to put the matter behind them.
For example, ACE Ltd. recently reached accord with the New York Attorney General's office and New York's insurance commissioner regarding its conduct principally regarding the broker Marsh and ACE's effort to expand its excess general-liability insurance business. (Illinois and Connecticut signed on, too). In a document whose title is rich in irony -- an "Assurance of Discontinuance and Voluntary Compliance" -- ACE undertakes to set up a compensation fund and to conform its future business practices. Review of the "Assurance of Discontinuance" provides rich, indeed stunning, detail into how business was done at the expense of corporate policyholders in particular whose premiums were sufficiently large as to make bid-rigging, kickbacks, lying, and cheating lucrative for the participants -- both the individuals whose bonuses and power reflected their success in business and the companies that employed them that generated large premiums from the widespread conspiracy and corruption endemic to the top-tier of the insurance brokerage industry and the insurers that paid them.
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Posted by Marc Mayerson at April 27, 2006 11:37 PM | Add New Comment
What You See Is Not What You Get: Renewal Policies
One aspect of insurance practice that I like is the seemingly unlimited number of nooks and crannies in insurance law. But like a tree falling in the forest, the existence of one pro-policyholder rule or another in a given state has little impact on human behavior -- or trial outcomes -- unless that rule is called upon. One such rule is the "renewal rule."
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Posted by Marc Mayerson at April 5, 2006 12:11 AM | Comments (3)
Blast Fax -- Policyholders Continue to Obtain Defense Coverage
The ongoing fights over coverage for junk faxes continue, with the trend favoring policyholders, most recently in the form of a US Court of Appeals for the Tenth Circuit decision, Park University Enterprises, Inc. v. American Cas. Co. (10th Cir. March 27, 2006).
A year ago at this time, policyholders began to feel more confident following an Eighth Circuit opinion that refused to follow negative decisions from the Seventh and Fourth Circuits; since then, the trend has continued to swing toward policyholders, at least insofar as they seek defense coverage to class actions alleging violations of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. 227.
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Posted by Marc Mayerson at March 29, 2006 11:57 AM | Add New Comment
Witness for the Prosecution: Me!
Insurance lawyers face a dilemma in that we sometimes can be called as witnesses in bad-faith trials. As a result, policyholder counsel like me need to consider whether we should be the person who interacts with the insurance company’s representatives, for we risk being disqualified from serving as trial counsel for our clients.
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Posted by Marc Mayerson at March 19, 2006 3:41 PM | Comments (3)
Aloha to Unasserted Coverage Defenses: Waiver, Estoppel, and Mend the Hold in Insurance Cases
Sometimes when an insurance company does not have an obligation to perform, it can be required to pay anyway. There are typically three doctrinal hooks that force insurers to provide coverage in circumstances where the terms of the contract strictly speaking does not require them to do so: waiver, estoppel, and “mend the hold.”
Posted by Marc Mayerson at March 12, 2006 5:17 PM | Comments (2)
Entwining Physical and Economic Losses under Business-Interruption Insurance
In his seminal book published more than 75 years ago entitled Business Interruption Insurance (Philadelphia 1930), C.M. Kahler wrote that “[u]nfortunately the development of an adequate system of business interruption insurance has been hampered by the fact that it has always been considered as a part of the direct damage insurance of the particular hazard.” Had United Airlines heeded Kahler’s insights into the nature of business-interruption coverage it could have structured its policy coverage to position itself better for recovery from its 9/11 losses; instead, United Airlines litigated a case that it lost at the trial court level and lost again on appeal to the Second Circuit. United Air Lines, Inc. v. Insurance Co. of the State of PA (2d Cir. Feb. 22, 2006).
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Posted by Marc Mayerson at February 28, 2006 11:03 PM | Comments (1)
The Risks of the Seas and of Federal Courts Seizing -- or Being Seised of -- Jurisdiction
Insurance contracts typically are creatures of state law. As a result, unlike other kinds of complex litigation, insurance-coverage disputes often are litigated in state, not federal, court. There are exceptions to this where there is diversity jurisdiction, though in complex, multiparty coverage cases it is often unusual for there to be complete diversity between and among all the parties.
Insurance disputes can end up in federal court under admiralty jurisdiction, which provides a jurisdictional hook to get into federal court where the insurance is maritime in character – or what is sometimes referred to as “salty.” There are traditional forms of maritime insurance that are subject to federal jurisdiction, such as hull, protection and indemnity, and cargo. Other forms of coverage may have a relationship to maritime risks, and parties may fight over getting into federal court and having federal admiralty law apply.
Posted by Marc Mayerson at February 19, 2006 3:34 PM | Add New Comment
What a Director (or Officer) Wants: A Guide for Insureds to the Wordings of D&O Policies
Claim frequency and claim values are going up for directors and officers of corporations, but insurance premiums are going down, coverage terms are getting broader, limits are increasing, and retentions are constant or decreasing. This is one of the findings in the most recent report from Tillinghast/Towers Perrin. As the report states, it “seems counterintuitive that there is a decrease in the excess premium given the increase in excess limits and increasing claim severity.” Premiums decreased by 8 percent in Tillinghast's survey (downward pressures confirmed by others) compared to last year’s survey of some 2000 survey participants, with average limits being $14.3 million. And 25 percent of US participants reported increased enhancements to their coverage terms and another 10 percent reported narrowing of exclusions. The principal markets for this insurance in the US are provided by Chubb and AIG, with other players trying to gain market share in different segments, such as Beazley.
Following the recent uptick in corporate liability and corresponding coverage disputes -- and the reported instances where directors have been required to dig into their own pockets as part of a settlement, directors and officers increasingly are asking about the precise terms of the coverage (roughly one-half of all companies in the Tillinghast survey). Increasingly, corporate directors and officers are scrutinizing (or should be scrutizing) the terms of the corporate-provided indemnities provided by their companies, in addition to evaluating the other form of protection for them, private insurance, and in both instances raising questions of credit-risk for each. What follows is a guide for in-house counsel, risk managers, and the directors and officers themselves to understand the coverage afforded by D&O policies and the specific changes that one might look for, and one needs to understand that issues may change depending on the particular industry in which the company operates. Sweating the small stuff here is important, because whether or not an insurance company affords indemnification may turn on the presence of one word or phrase – or its absence.
Posted by Marc Mayerson at February 11, 2006 4:32 PM | Comments (6)
AIG Settles NY State Charges and Buys Insurance Against Future Liability
AIG has settled New York state charges related to accounting, bid rigging, premium overcharges, and other improprieties. There are many components of this settlement, including admissions of wrongdoing by AIG. One component of interest to corporate policyholders is the $375 million fund being established for the benefit of policyholders that purchased or renewed AIG excess casualty policies between January 1, 2000, and September 30, 2004. Each policyholder within this class will receive a proportionate share of the settlement fund based on the ratio of the premiums it paid to the amount paid by all policyholders in the class.
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Posted by Marc Mayerson at February 9, 2006 12:54 PM | Comments (2)
Fettering the Insurer’s Privilege to Control the Defense It Is Duty Bound to Provide
For more than fifty years, policyholders and their insurers have been struggling over the insurer’s promise to defend and the insurer’s control the defense. Policyholders properly have been concerned that an insurance company that controls the defense of an action potentially covered by the carrier’s duty to indemnify will use that control to avoid that very same indemnity obligation. While in egregious cases where a lawyer hired by the carrier has abused his or her relationship with the insured, the client, so as to favor the lawyer’s source of income – the insurance company – the courts have responded to protect the insured’s interests. But most courts have ruled that such after-the-fact remedies are insufficient: they do not adequately compensate for the injury; meritorious claims are not pursued (in part because insureds may not discover the abuse); and the potential for this abuse alone undermines the dominant purpose of the insurance relationship to afford protection and peace of mind for the insured.
Posted by Marc Mayerson at February 4, 2006 11:39 PM | Add New Comment
With Friends (Clients) Like These . . . .
Lawyers working for insurance companies have been exposed to significant pressures from their clients in recent years. While cost-containment billing guidelines and other measures have created significant tensions in those relationships, even the most creative, out-of-the-box management consultant for insurers is unlikely to have dreamt up the facts of a recent Mississippi Supreme Court case.
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Posted by Marc Mayerson at January 30, 2006 11:37 AM | Comments (5)
Medical-Malpractice Liability and Insurance Myths -- and Reality
Nearly 100,000 killed last year, the same rate as in the ongoing, repellent genocide in Darfur. But this figure is the estimate of the number of Americans who die annually due to medical-malpractice errors.
That’s one of the key points emphasized in the trenchant new book by Professor Tom Baker, The Medical Malpractice Myth (2005). Baker’s slim, accessible, engaging, and well-written volume argues that the prevailing myths concerning medical malpractice and doctors’ liability-insurance premiums are the stuff of urban legend.
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Posted by Marc Mayerson at January 28, 2006 12:12 PM | Comments (6)
Insurance Industry Spared from Bankruptcy: Asbestos 524(g) Settlements
The California Court of Appeal has reversed a ruling holding that liability insurers of an asbestos company had immediate obligations to perform in full once a trust was established through section 524(g) of the bankruptcy code that concurrently extinguished the liability of the policyholder vis a vis the asbestos claimant creditors. Fuller-Austin v. Highlands Ins. (Cal. App. Jan. 19, 2006). The "acceleration" of insurers' obligations that these 524(g) trusts might create has caused apoplexy in the insurance industry, and the California court's reversal of the insurance ruling that the creation of the trust meant the insurers had immediate obligations to perform for the total (non-bankruptcy) value of the future claim stream no doubt produced a collective sigh of relief from the insurance industry (and their reinsurers).
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Posted by Marc Mayerson at January 20, 2006 10:37 AM | Comments (1)
Gelding the Pollution Exclusion: Welding Exposure Claims Not Barred
For the past several years, the plaintiffs’ tort bar has sought to make workplace-exposure claims by welders the proverbial “next asbestos.” These cases typically allege a Parkinson’s Disease-like syndrome (“Parkinsonism”) or other neurological impairments (all generally referred to as “manganism”) allegedly stemming from the welder’s exposure to manganese while working. Whether this is a mass-tort with legs is certainly not clear, and the defense has had successes (even in what are considered to be plaintiff-friendly jurisdictions). Naturally, this litigation has produced insurance cases too, and the Maryland Court of Appeals (its highest court) recently ruled that an absolute pollution exclusion did not apply to bar coverage. Clendenin Bros. v. United States Fire Ins. Co. (Md. Jan. 6, 2006).
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Posted by Marc Mayerson at January 16, 2006 3:55 PM | Add New Comment
Disavowals of Liability Do Not Disembowel Coverage: Liability Settlements and Insurance Coverage
Liability insurance policies apply where the insured is liable for bodily injury, property damage, or wrongful acts (depending on the policy). What happens, however, when the policyholder denies that any injury or wrongdoing took place? Does that mean that insurance is not applicable?
Posted by Marc Mayerson at January 8, 2006 4:35 PM | Comments (1)
Defense Coverage Under Excess Insurance Policy Forms
Defense-cost expense in major litigation – either one-shot cases or related, serial cases – can accumulate to rather substantial amounts, so naturally policyholders look to their liability-insurance policies for coverage. While most defense-cost coverage disputes concern primary-layer policies, excess insurers, too, may have obligations to perform. As discussed below, a recent Indiana appellate decision addressed coverage for defense costs under a primary-layer policy written on an excess policy form and held that the coverage was restricted to after-the-fact payment as an incident to covered indemnity amounts.
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Posted by Marc Mayerson at January 4, 2006 3:05 PM | Comments (3)
Triggering Asbestos Coverage: Creating Gaps
Asbestos coverage cases continue to wend their way through the appellate courts. The Massachusetts Supreme Judicial Court recently weighed in on the question of trigger, nondisclosure, and the obligations of guaranty funds that back now-insolvent insurance companies. AW Chesterton Co. v. Massachusetts Insurers Insolvency Fund (Mass. Dec. 12, 2005).
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Posted by Marc Mayerson at December 15, 2005 11:52 AM | Add New Comment
A Slip ‘Twixt the Cup and the Lip: Captive Insurers and Reinsurance Recovery
The price of an insurance policy naturally includes a projection of future payouts under the policy plus a profit margin for the insurer. Rather than giving profit to an insurance company, sometimes corporate policyholders will elect to try to capture that profit by creating a “captive” insurance company. In this way, when the premium is paid to the captive insurance company, the “profit” component is retained on the corporation’s overall balance sheet. There are other reasons to establish a captive: a sense of greater control over the loss-adjustment process; greater certainty of performance; and opportunities for certain tax advantages (not so much from the deductibility of premium expenses as compared to the accrual of reserves but rather from obtaining investment income in a tax-advantaged manner on assets held by (or stuffed into) foreign-domiciled captives).
It is uncommon to find that a company only has a captive program: typically, there is commercial insurance market involvement through excess-layer insurance above the captive or through reinsurance of the captive. (Sometimes the reinsurance relationship is the converse where the insured has commercial insurance that is reinsured into the captive.) When a corporation taps reinsurance markets, what it wants most assuredly is the seamless flow of loss and coverage through the captive to the reinsurer once the retention is exceeded. In this regard, a recent High Court decision in London is important to note, because the decision creates a gap in this flow stemming from of all things a difference in “choice of law” as between the captive-issued policy and the reinsurance policy backing it.
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Posted by Marc Mayerson at December 11, 2005 6:05 PM | Comments (1)
Your Broker May Be Your Friend – But Ain't Your Lawyer
Policyholders often assume they have a confidential relationship with their insurance brokers. Not so.
Communications with or by brokers can become unwelcome pieces of evidence in insurance-coverage cases. Brokers have not been schooled in the need to recognize that their communications constitute evidence, for good or ill. Broker communications often are unhelpful in coverage cases because (with due respect): (i) brokers are not lawyers and so sometimes make casual, overly broad or unduly fuzzy statements about what’s covered or not; (ii) brokers don’t keep up with changing insurance-coverage law in every jurisdiction and the cutting-edge of coverage disputes; and (iii) brokers suffer from bureaucratic capture (that is, bend toward the thinking of insurance carriers). Most courts hold that insurance brokers are agents of the insured, rather than being true neutrals in a transaction, so insurance-company lawyers will argue that infelicities in broker correspondence should be deemed agent-admissions against the insured.
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Posted by Marc Mayerson at December 6, 2005 1:59 PM | Comments (5)
Discovery of Insurer Reserve Information: Implied Admission of Coverage or Attorney Work Product ? Or Both?
One common area of discovery disputes in insurance-coverage cases concerns reserve information from carriers. The policyholder-side thinking goes that it is inconsistent with the insurer’s flat denial of coverage for it to accrue a reserve on the claim, especially a reserve at close to full value. There is some logical and emotional appeal to this “putting your money where your mouth is” discovery, that is, requiring that what the carrier says to the jury be consistent with where it is putting its money.
Posted by Marc Mayerson at December 3, 2005 12:36 PM | Comments (11)
E Pluribus Plures: More on Number of Occurrences
Courts continue to confront the question of the “number of occurrences” involved in mass-tort situations. The issue is important because policy limits are expressed in dollars per occurrence, with some policies having unlimited or uncapped retentions on a per-occurrence basis. For a policyholder with a large and uncapped per-occurrence retention, a ruling that each claim against the policyholder is a separate occurrence results in multiplying the amounts retained by the policyholder, oft times pushing insurance out of reach. On the other hand, for a policyholder with no or low retentions, a finding of multiple occurrences can multiply the available coverage.
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Posted by Marc Mayerson at December 1, 2005 12:52 PM | Comments (3)
More Alchemy than Chemistry: Corporate Purchases of Liability Insurance 2005
Purchasing the “right” amount of coverage is not possible. There is a tradeoff among the availability of coverage, the price of coverage, the company’s other financial resources, projections of how much a single claim and accumulation of claims might cost, and a number of other factors. Learning what one’s peers are doing can be helpful, and the broker Marsh annually publishes a study, most recently “Limits of Liability 2005: Balancing Price Against Need,” that reports on insurance-purchasing trends of businesses.
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Posted by Marc Mayerson at November 21, 2005 6:52 PM | Comments (1)
Stranded without Recourse: FEMA Halts Payment of Flood-Insurance Claims
The insurance industry long has inculcated the belief that, in the policyholder’s time of need, the insurer will be a steadfast source of protection, compensation, and prompt relief. Over the past couple of months, close to a quarter million policyholders have turned to their (federally backed) flood insurers and filed claims under flood-insurance policies for losses from Katrina, Rita and Wilma. There are nearly 100 insurance companies whose write-your-own (WYO) flood-insurance policies are backed by FEMA, and FEMA – amazingly, alarmingly – has told those insurers to stop paying claims.
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Posted by Marc Mayerson at November 17, 2005 3:21 PM | Comments (4)
Blowin’ in the Wind: Insurance Coverage for Wind, Rain, and Wind-Driven Rain
Seemingly in anticipation of the expected deluge of coverage disputes arising from Katrina, Rita, and Wilma, the Second Circuit released a careful opinion in a case where rain damage resulted from wind-caused openings in a building. The precise issue concerned application of a “wind deductible,” but the decision sweeps more broadly in addressing the methodology for interpreting policies in determining covered causes of loss and the relevance of insurance-industry practice. Turner Constr. Co. v. ACE Prop. & Cas. Ins. Co. (2d Cir. Oct. 28, 2005).
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Posted by Marc Mayerson at November 10, 2005 4:19 PM | Comments (4)
Insurance for Goods in Transit
Companies that make things need to get those things to their customers, and they face the risk of loss while the goods are in transit to the customer. Via contract, one can shift or retain the risk of loss during transit, such as having title pass to the customer once the item leaves the company’s facility or to wait until the customer accepts the item at its location. In addition to shifting to one party or the other the risk of loss via the sale contract, the company can obtain insurance to protect itself against loss. Recent cases have addressed both liability coverage – insurance against the risk of loss to goods for which title has passed to the buyer – and first-party coverage – insurance against loss in transit while title remains vested in the seller.
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Posted by Marc Mayerson at November 6, 2005 6:20 PM | Comments (3)
Culminating in Error: NonCumulation Provisions
Occurrence-based liability policies insure against the risk that the policyholder will be held liable for injury during the policy period. When injury occurs over more than one policy period, however, questions sometimes arise as to whether the insurance policy in each year applies and if they all apply how much does each policy pay.
Some insurers recognize the possibility that when they issue insurance policies across time they are at risk from their insured’s collecting under successive policies for essentially one tort. To protect themselves from paying multiple limits, some insurers use a non-cumulation of liability clause. The New York Court of Appeal recently addressed the impact of a non-cumulation clause, holding that it confined the insured’s recovery to a single year’s loss limit.
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Posted by Marc Mayerson at October 30, 2005 12:52 PM | Comments (3)
Culminating in Error: NonCumulation Provisions
Occurrence-based liability policies insure against the risk that the policyholder will be held liable for injury during the policy period. When injury occurs over more than one policy period, however, questions sometimes arise as to whether the insurance policy in each year applies and if they all apply how much does each policy pay.
Some insurers recognize the possibility that when they issue insurance policies across time they are at risk from their insured’s collecting under successive policies for essentially one tort. To protect themselves from paying multiple limits, some insurers use a non-cumulation of liability clause. The New York Court of Appeal recently addressed the impact of a non-cumulation clause, holding that it confined the insured’s recovery to a single year’s loss limit.
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Posted by Marc Mayerson at October 30, 2005 12:52 PM | Comments (3)
When ERISA Suits Tagalong to D&O Claims the Fiduciary-Liability Coverage Might Not
Corporate directors and officers litigation today often involves claims asserted under the federal securities laws as well as under federal employee-benefits law (ERISA). The plaintiffs in these suits are conceptually different: securities-law plaintiffs are people who (and entities that) purchased or sold the company’s securities; ERISA plaintiffs are participants in employee-benefit plans that held or permitted the investment in company securities. Increasingly, ERISA cases are tagging along to securities cases: the directors and officers (who often are plan fiduciaries) are alleged to have failed to disclose certain facts about the company’s operations or finances to the market generally (for securities claims) or to participants in company-sponsored employee-benefit plans (for ERISA claims).
The United States Court of Appeals for the First Circuit recently had the opportunity to address coverage for a tagalong ERISA claim that was made four years after a securities-law class action was filed. In a very troubling opinion, the court ruled that no coverage was available for the ERISA class action because the gravamen of the complaint echoed the allegations in the earlier securities class action. The basis of the court’s ruling was not that the policyholder had failed to disclose the early securities-law class action, but rather that a generic prior-and-pending litigation exclusion barred coverage. Federal Ins. Co. v. Raytheon Co. (1st Cir. Oct. 21, 2005)
Posted by Marc Mayerson at October 26, 2005 11:14 PM | Comments (1)
It’s Good to Be a Bad Insurance Company in America
The most recent Supreme Court decision on the constitutionality of punitive damages was a third-party insurance bad-faith case. State Farm Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003). In that case, the Supreme Court gave strong indications that in insurance cases the maximum punitive damages that may be constitutionally awarded is predicated on a one-to-one ratio between the punitive damages and the compensatory damages, i.e., they must be (nearly) equal to one another. However, on remand from the US Supreme Court the Utah Supreme Court held that, considering the facts involving State Farm and the Campbells, the insurer’s conduct and the injury involved merited punitive damages that were nine times the compensatory-damages award. 2004 UT 34.
Recently, the Oregon Court of Appeals had the opportunity to address the question of the appropriate ratio between punitive and compensatory damages in an insurance bad-faith case, finding that a three-to-one ratio was appropriate. Goddard v. Farmers Ins. Co., (Ore. Ct. App. Oct. 12, 2005). And the court made clear that this ratio approached the asymptotic limit.
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Posted by Marc Mayerson at October 20, 2005 12:18 AM | Comments (7)
Targeting Policyholder Counsel in Asbestos Bankruptcy Cases
Asbestos liabilities have caused a number of companies to seek the protection of the bankruptcy laws to manage the present and future stream of tort claims and to facilitate insurance recovery. A special provision of the bankruptcy code was added in 1994 to facilitate the resolution of asbestos claims in bankruptcy, 11 USC 524(g).
A more recent wrinkle in the asbestos-driven bankruptcies has been use of “pre-packaging” or “pre-pack” wherein before the bankruptcy filing the debtor and its principal creditors negotiate the resolution and then go to bankruptcy court to obtain judicial imprimatur. For several reasons, the insurers have begun to pull out all stops in fighting against asbestos bankruptcies, most recently attacking counsel for the policyholder, where that insurance counsel was too involved in pre- and post-bankruptcy matters.
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Posted by Marc Mayerson at October 15, 2005 1:47 PM | Comments (2)
Kentucky Rules on Environmental Coverage
Many of us who have been practicing for quite some while in the insurance-coverage area at times marvel at the return or continuation of the coverage "wars" of the 1980s. We still confront the same issues in cases that were the focus twenty years ago, though sometimes courts confront new twists in otherwise well-trodden paths.
The Kentucky Supreme Court recently had the opportunity to address a number of the key environmental coverage issues in an insurance dispute commenced in 1987. In an opinion challenged by a lengthy dissent, the Kentucky high court addressed (among others): (i) whether response costs represent covered “damages” on account of property damage indemnifiable by CGL policies; (ii) whether administrative enforcement proceedings were “suits” to which the duty to defend applied; and (iii) how the (equivalent of an) owned-property exclusion applies. It also addressed whether the insured knew of the risk of injury such that coverage should be denied. And the court addressed whether the insurers’ payment of damages for breach of the duty to defend was subject to policy limits, which would have been the case had the insurers performed initially. This last issue, especially as resolved by the Kentucky high court, is not typical fodder in environmental-coverage cases.
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Posted by Marc Mayerson at October 11, 2005 2:24 PM | Add New Comment
Le Affaire Condon: On Art, Death, and Insurance
An artist-photographer named Thomas Condon set up shop in the Cincinnati morgue. His photographing corpses without the permission of the next of kin led to various civil and criminal proceedings against him. It naturally has led to an insurance case, too.
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Posted by Marc Mayerson at October 7, 2005 2:05 PM | Add New Comment
The Faulty Workmanship of the Courts
A common criticism of courts dealing with insurance issues is that they forget they are dealing with a contract. Where courts don’t like the economic incentives that (they fear) they might create by affording coverage, they sometimes make up coverage-limiting postulates that are nowhere expressed in the policy.
This is what happened in the South Carolina Supreme Court recently, which confronted a question common in the construction context – namely, is a contractor’s faulty construction a covered occurrence. L-J Inc. v. Bituminous Fire and Marine Ins. Co. (S.C. Sept. 26, 2005). If that kind of event can never be an "occurrence," then insurance companies never have an obligation to pay for the defense of claim alleging resulting injury and damage or to fund the cost of any settlement or, if the case gets tried, any judgment.
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Posted by Marc Mayerson at October 3, 2005 11:21 AM | Comments (5)
Good Deeds, Smart Business, Corporate Waste, and Ex Gratia Payments
Americans in the Gulf States have endured Katrina and Rita in close succession, similar to how their Florida neighbors suffered through a series of hurricanes last year. Those who have been affected by these hurricanes naturally turn to their insurers for help. When losses stem from both of the recent hurricanes, however, insurers can compound their insureds' financial woes by requiring them to absorb separate deductibles for each storm.
Some insurers have responded by saying that only one deductible will be required in these circumstances. That decision, however, potentially exposes those insurers on the reinsurance and shareholder fronts.
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Posted by Marc Mayerson at September 30, 2005 10:04 AM | Add New Comment
Stay What? Coverage Claims May Proceed Against Insolvent Insurers
When insurance companies become insolvent, they are eligible for reorganization or liquidation pursuant to special state-law “bankruptcy” proceedings. As with federal bankruptcies, the debtor typically seeks a stay of litigation against it, ostensibly for the purpose of permitting the bankruptcy court to centrally manage the valuation of claims and distribution of assets.
In insurance bankruptcies, it is common for the liquidation or rehabilitation court to issue an order stating that all actions against the insurer are stayed. When an action is pending outside that forum, complex issues of federalism and statutory constructions seemingly are presented; when the action against the insurer is pending in federal court, the questions are doubly complex – or so they seemed before a lucid opinion by the United States Court of Appeals for the Ninth Circuit, which recently cut through all the questions presented and held the issues were quite simple after all.
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Posted by Marc Mayerson at September 22, 2005 11:31 AM | Comments (2)
Katrina -- Submit Your Proofs of Loss or Forfeit Insurance Coverage -- Updated!
The federal government provides flood insurance protection principally through private insurance companies. These flood policies require that the insured file a sworn proof of loss within 60 days from the date of the damage. In the circumstances of Katrina, there has been a great desire to assist policyholders in obtaining their coverage benefits. FEMA apparently has responded by relaxing the period within which to file a claim and, if necessary, to bring suit.
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Posted by Marc Mayerson at September 21, 2005 10:20 AM | Comments (11)
Tragedy and Failure
Insurers dealing with Katrina losses are caught between a rock and a hard place -- more accurately, between flood and wind-driven rain. Generally, under typical homeowners policies, flood-caused loss is excluded but wind-driven rain and other windstorm-caused loss is covered. The Mississippi attorney general, under pressure from leading members of the plaintiffs' mass-tort bar, has brought suit seeking to force insurers to pay claims, notwithstanding the terms of the insurance policies.
There is historical precedent for insurers' paying claims following mass disaster in derogation of policy terms. The story is told famously of Cuthbert Heath, an underwriter at Lloyd's of London, who following the San Francisco earthquake cabled his US attorneys saying: "Pay all our policyholders in full irrespective of ther terms of their policies." And there seems to be little doubt that this decision of C.E. Heath helped establish the positive reputation (deserved or not) Lloyd's enjoyed in the US for many, many years.
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Posted by Marc Mayerson at September 16, 2005 9:42 AM | Comments (8)
Defending Defense Costs: Parrying the Attack of the Legal-Fee Auditors
A common play by insurers that have failed to perform their duty to defend is to challenge the defense costs their policyholders incur on the grounds that they were unreasonable. The suggestion is that had the carrier defended the costs would have been less because the carrier would have hired cheaper defense counsel, or it would have ridden tighter herd on the costs incurred, or it would have required that only a limited number of lawyers be involved, or any of several other grounds for second-guessing the costs incurred by the policyholder. In addition to advancing these arguments, insurers have fabricated a specialized mouthpiece for making these points: "legal fee auditors." But both the legal premise and the "expert" testimony offered in support increasingly are being looked upon with the skepticism properly applied to the excuses of a breaching party that is seeking to reduce its obligation to pay damages - especially when that breaching party is an insurance company that was supposed to defend its insured in the first place.
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Posted by Marc Mayerson at September 15, 2005 12:14 PM | Comments (15)
Absolute Nonsense
What we once conceived of as the environmental coverage wars continue in a new, broader form where insurance companies seek to deny coverage for the liabilities of their policyholders whenever they stem from toxic exposures.
In 1986, the “absolute” pollution exclusion was widely introduced. There is agreement that Superfund-type claims and other true environmental liability claims are barred under the various guises of the absolute pollution exclusion. But the insurers have not limited their claim denials to that context.
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Posted by Marc Mayerson at September 11, 2005 3:58 PM | Comments (1)
Businesses Far from Katrina May Have Insurance Claims
Businesses lucky enough to be located outside of Katrina's wrath still are exposed to losses from the hurricane: while they may not have suffered physical losses to their assets, their suppliers or customers, or both, may have been damaged. As a result, these "unaffected" businesses may have coverage for their own economic losses stemming from Katrina.
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Posted by Marc Mayerson at September 6, 2005 3:51 PM | Comments (3)
Update on Coverage for Blast Faxes
The Appellate Court of Illinois has rejected the reasoning of two key recent federal appellate decisions from the Seventh and Fourth Circuits that barred coverage for an insured's liability for blast faxes under the TCPA (Telephone Consumer Protection Act). Instead, the appellate court found the carrier to have a duty to defend under its coverage for advertising injury.
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Posted by Marc Mayerson at September 1, 2005 4:51 PM | Comments (3)
Grab Your Umbrella -- and Magnifying Glass
For the past two decades, policyholders and insurers have been fighting over whether the cost of cleaning up hazardous-waste sites is covered under general-liability policies by arguing over the nature of that liability. The argument has tended to center on the meaning of the word "damages" and the insuring agreement's promise to afford indemnification for the sums payable "as damages."
Departing somewhat from the standard version of these arguments, the California Supreme Court ruled in 2001 that covered "damages" were limited to amounts awarded by a court. Now, the court has reaffirmed that holding, County of San Diego v. Ace Property & Casualty Ins. Co. (Cal. Aug. 29, 2005), but in a companion case held that an umbrella policy that afforded coverage for "expenses" in addition to "damages" unambiguously applied to clean-up costs incurred in an administrative proceeding. Powerine Oil Co. v. Superior Court (Cal. Aug. 29, 2005). The court purports to be implementing the "mutual intent" of the parties, with the result that one insured has coverage due to the inclusion of the word "expenses" and the other one does not.
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Posted by Marc Mayerson at August 30, 2005 2:49 PM | Add New Comment
Walks and Quacks like a Duck: The Reach of Insurance Regulation to a Seller’s Provision of Insurance-Like Benefits – Of Warranties, Requirements Contracts, & Other Benefits
State regulation of insurance applies if the transaction in question is found to be “insurance.” If something is “insurance,” the entity providing it generally must be a licensed insurance company. If not licensed, then the entity exposes itself to fines and potential criminal liability, in addition to the invalidation of the “insurance” it provided. Many manufacturing, service, and retail companies can find it in their interest to package an insurance-like benefit along with the sale of its product or provision of its service. What are the legal risks to the company from providing this type of benefit to its customers and how can the benefit be structured to minimize the risk yet achieve business objectives?
Posted by Marc Mayerson at August 11, 2005 11:16 PM | Add New Comment
An Insurance Company’s Duty to Consent
In many types of insurance policies, the carrier’s obligation to perform is tied to its consenting to the incurrence of costs or the settlement of an underlying case. One assumes that an insurer cannot withhold consent willy-nilly, for that would make coverage illusory. There is a dearth of authority, however, that makes express the circumstances in which an insurer is not permitted to withhold consent – that is to say, the circumstances in which it is required to consent. The Supreme Court of Iowa recently addressed that question and made clear that insurers are obligated to consent when faced with a reasonable request.
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Posted by Marc Mayerson at August 3, 2005 10:06 PM | Comments (2)
Dissolving Solvent Schemes of Arrangement
Bankruptcy is one option for insolvent companies to manage their obligations to creditors and to provide an efficient mechanism to marshall assets for their benefit; an insolvent insurance company similarly may enter a bankruptcy-like process and pay the claims of its creditors – its policyholders – and marshall its assets (typically reinsurance). Over the past few years, however, we have seen increasing numbers of solvent insurance companies seek to ring fence their liabilities – and lock in profits or at least circumscribe losses – by entering into bankruptcy-like processes by which they forcibly commute their obligations to their policyholders. In 2002, Rhode Island established legislation permitting this type of solvent runoff, but most of the action in this area has been in England for London-market insurers that wrote substantial North American (especially US) risks under broad occurrence policy forms and that now wish to extinguish the long-tail liabilities that naturally follow. Because of a new English decision, however, the ability of London market insurance companies to forcibly terminate their obligations to their policyholders is now in substantial doubt.
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Posted by Marc Mayerson at July 26, 2005 5:29 PM | Comments (3)
No Whining: 2004 Was a Good Vintage for US Property-Casualty Insurers
The Insurance Services Office (ISO) recently released combined financial figures for the year 2004 for the US property-casualty industry, and it was a very good year for the industry.
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Posted by Marc Mayerson at July 21, 2005 3:07 PM | Comments (1)
No Whining: 2004 Was a Good Vintage for US Property-Casualty Insurers
The Insurance Services Office (ISO) recently released combined financial figures for the year 2004 for the US property-casualty industry, and it was a very good year for the industry.
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Posted by Marc Mayerson at July 21, 2005 3:07 PM | Comments (1)
Late Reporting in Claims-Made Policies: Getting to the Root of the Issue
The California Court of Appeal issued an innovative decision that fills in important gaps in the analysis of issues concerning providing notice under “claims made and reported” liability insurance policies. The case, Root v. American Equity Specialty Ins. Co., available at http://caselaw.lp.findlaw.com/data2/californiastatecases/g033818.pdf (Cal. Ct. App. June 28, 2005), involved an insured who faced falling between two stools: not having coverage under consecutive liability policies because the claim was made during one policy period and its report was made in the second. The Fourth Appellate District (Division Three) emphasized that its holding was narrow: it was not invalidating claims-made-and-reported policies but rather was implying an equitable grace period to report a claim under an expired policy.
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Posted by Marc Mayerson at July 14, 2005 1:45 PM | Comments (3)
Mess in Texas -- Insurer Reimbursement of Settlement Payments
While in May 2005 the Texas Supreme Court had unanimously held -- but with splintered rationales -- that an insurer may recover from its own insured monies advanced by the insurer to settle an uncovered liability claim, the Texas court rang in the 2006 new year by granting rehearing in the case. The case, Excess Underwriter’s at Lloyd’s, London v. Frank’s Casing Crew & Rental Tools, Inc., (Tex. May 27, 2005), rehearing granted, 2006 Tex. LEXIS 1 (reversed on 1 February 2008), picks up the cudgels on this issue from the California Supreme Court’s opinion in Blue Ridge Ins. Co. v. Jacobsen, 22 P.3d 313 (Cal. 2001) and seemingly abandons the prior decision in Texas Ass’n of Counties County Gov’t Risk Mgmt. Pool v. Matagorda County, 52 S.W.3d 128 (Tex. 2000), which had cast substantial doubt on the viability of an insurer-recoupment claim, at the time seeming to bring Texas in line with Massachusetts on this issue. See Med. Malpractice Joint Underwriting Ass’n of Massachusetts v. Goldberg, 680 N.E.2d 1121 (Mass. 1997). Frank’s Casing also parts company with the recent holding of the Illinois Supreme Court in General Agents Insurance Company Of America, Inc. v. Midwest Sporting Goods Company, 828 N.E.2d 1092 (Ill. March 24, 2005), which had rejected a carrier claim to recoupment of defense costs, though on a basis that would bar recoupment of settlement or indemnity payments, too.
In Frank’s Casing, the insured was involved in a serious case, resulting in a $7.5 million settlement. The insurers had previously offered to pay roughly two-thirds of this amount without a right of recoupment against the insured; the insured rejected this proposal, and the insurers paid the full sum and sought recovery from the insured of the entire amount.
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Posted by Marc Mayerson at July 6, 2005 4:59 PM | Comments (4)
Equitas Financial Reports – 2005 Version
As part of the Reconstruction and Renewal of Lloyd’s in 1996, several Equitas entities were created to serve as the final reinsurer-to-close and to manage the run-off of underwriter liabilities for non-life 1992 and earlier business.
On June 7, 2005, Equitas issued a press release on its annual results and more recently made available its Report & Accounts for the year ended 31 March 2005.
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Posted by Marc Mayerson at June 29, 2005 4:40 PM | Add New Comment
It’s a Crime: Efforts to Constrict the Broad Scope of Fidelity Insurance Coverage
Companies purchase fidelity-insurance policies to cover them against the risk of loss from employee dishonesty. Fidelity coverage generally is divided into two types: financial fidelity, which covers banks and other financial institutions, and commercial fidelity (or commercial crime coverage), which covers other types of businesses. On the financial-fidelity side, there is significant standardization of policy forms; on commercial fidelity, though the policy language often springs from the Surety Association of America or the Insurance Services Office, there is less standardization in the wordings.
Generally speaking, two key issues are presented in any commercial fidelity claim: is the misconduct covered and, if so, how much does the policy pay for. The first question typically involves whether the employee acted with “manifest intent” to benefit himself (or someone else) and to harm its employer. The manifest-intent concept was introduced in 1976 and has spawned 30 years of litigation (and increasingly the manifest-intent concept is being abandoned by policy drafters). Less attention has been paid to the scope of the indemnification provided insureds for the “Loss of Money, Securities or other property.” The case, Building One Services Solutions, Inc. v. National Union Fire Ins. Co. of Pittsburgh, PA, Civil No. 02-311-A (E.D. Va. Nov. 26, 2002), available at 7-24 Mealey’s Emerg. Ins. Disp. § C (Dec. 17, 2002) (on LEXIS), addresses both issues (I note that I was lead counsel in this case).
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Posted by Marc Mayerson at June 29, 2005 2:44 PM | Add New Comment
Notice this Case
New York has been one of the last jurisdictions to hold onto the view that a policyholder’s promise to provide notice to its insurer of occurrence, claim or suit must be performed punctiliously at the risk of complete forfeiture of coverage. Following a relaxing of this rule when insurers themselves are the policyholder – that is, when they are in their capacity as cedents seeking reinsurance recovery – and given the lack of analytic foundation for New York’s formalism (addressed further below), many thought that New York would eventually adopt some form of what is usually called the “notice/prejudice” rule (probably akin to that in neighboring Connecticut, cited infra).
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Posted by Marc Mayerson at June 27, 2005 6:12 PM | Comments (1)
Accidental Suicide
Derivative liability for the acts of others is a feature of tort and other liability regimes, and these forms of liability then present insurance-coverage issues in terms of whether the insured seeking coverage is somehow charged with the knowledge of the actor who engaged in the conduct at issue.
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Posted by Marc Mayerson at June 27, 2005 6:07 PM | Comments (2)
D&O Implications of the AIG Mess
New York’s Attorney General and Insurance Commissioner have filed a civil complaint against AIG, Maurice Greenberg, and Howard Smith. (A copy of the complaint is available at http://www.oag.state.ny.us/press/2005/may/Summons%20and%20Complaint.pdf .) Further insight into the nature of the transactions comes from the SEC’s complaint against a former executive of General Re, who allegedly aided and abetted some of the allegedly fraudulent conduct engaged in by AIG to improve its balance sheet, which made a $144 million decrease in reserves in fourth quarter 2000 look like a $106 million reserve strengthening, and a $187 million decrease the following quarter appear as a $63 million increase in reserves, measures that improved AIG’s appearance to Wall Street and positively affecting its share price. (The SEC’s June 6 complaint is available at http://www.sec.gov/litigation/complaints/comp19248.pdf ) While an increase in reserves decreases an insurance company’s surplus, a positive one-dollar movement in AIG stock price supposedly increases Greenberg’s personal worth by $65 million, according to the NY complaint. Other actions have been filed against Mr. Greenberg relating to AIG, including one filed the same day by Ohio seeking to block his now well-known effort to give several million AIG shares of stock to his wife as the turbulence was increasing. See http://www.kpmginsiders.com/display_reuters.asp?cs_id=133552
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Posted by Marc Mayerson at June 9, 2005 4:42 PM | Comments (6)
Denominators and Punitive Damages in Bad-Faith Cases
In State Farm v. Campbell, which limns the constitutional parameters of awarding punitive damages, the United States Supreme Court in a third-party insurance bad-faith case ruled that “in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.” 538 U.S. 408, 425 (2003). The State Farm Court went on to hold that the “precise award . . . must be based upon the facts and circumstances of the defendant’s conduct and the harm to the plaintiff[, and] courts must ensure that the measure of punishment is both reasonable and proportionate to the amount of harm to the plaintiff and to the general damages recovered.” Id. at 425-426. See generally Simon v. San Paolo U.S. Holding Co. Inc., (Cal. June 16, 2005), available at http://www.courtinfo.ca.gov/opinions/documents/S121933.PDF.
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Posted by Marc Mayerson at June 9, 2005 4:19 PM | Comments (1)
Just the Fax: Coverage for Unsolicited Faxes under the TCPA
It wasn’t long ago when junk faxes were the spam about which legislators were concerned. Congress responded in part by passing the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”), a statute that has spawned its own cottage industry of lawsuits because of the mandatory liquidated damages provision of $500 per violation and the marketing technique of “blast” faxing, where a vendor sends advertisements by fax to thousands. Lawyers have brought class actions seeking $500 a pop for each unsolicited fax sent by companies, typically local businesses who have contracted with blast-fax advertising companies. E.g., http://www.law.com/jsp/printerfriendly.jsp?c=LawArticle&t =PrinterFriendlyArticle&cid=1076428446748
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Posted by Marc Mayerson at June 9, 2005 4:17 PM | Add New Comment
Recoupment of Defense Costs
The question whether an insurance company that defends its policyholder may recoup the defense-cost payments it made continues to be litigated with divergent results. Most recently, the Illinois Supreme Court and Montana Supreme Court reached opposite conclusions in opinions issued a few weeks apart. See General Agents Insurance Company Of America, Inc. v. Midwest Sporting Goods Company, http://www.state.il.us/court/Opinions/SupremeCourt/2005/ March/Opinions/Html/98814.htm (Ill. March 24, 2005); Travelers Cas. & Sur. Co. v. RIBI Immunochem Research Inc., http://www.lawlibrary.state.mt.us/dscgi/ds.py/Get/File-39479/04-228.pdf (Mont. March 1, 2005).
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Posted by Marc Mayerson at June 9, 2005 4:16 PM | Add New Comment
The Economics of the Property-Casualty Insurance Business (including Reinsurance)
Warren Buffett annually issues a letter to the shareholders of Berkshire Hathaway discussing business developments over the year. As is well known, a significant core of Berkshire Hathaway’s business is insurance: property-casualty from National Indemnity, auto from GEICO, and reinsurance, especially usual reinsurance placements.
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Posted by Marc Mayerson at May 9, 2005 3:56 PM | Comments (2)
Expecting the Run-Around: Juries and Insurance-Coverage Cases
Over the past few years, we have participated in mock jury exercises in some of our coverage cases for policyholders. These exercises are extremely helpful in preparing for trial. They allow us to road test trial themes and to see what points gain transaction with our mock jury. Mock jury exercises sometimes will provide us with great handles for the real trial, such as a phrase or analogy that we had not thought of ourselves. We watch via closed-circuit television or through a one-way mirror while the jurors discuss the case and deliberate (they also fill out a raft of questionnaires that help us understand attitudes, demographics, and the like). But it is the deliberations that are most helpful to the trial lawyer. As an example, a mock juror in one exercise said, “A half truth is a whole lie,” which nicely characterized what we were trying to say about how the insurance company had misrepresented the policy language to the policyholder by omitting the key sentence that undercut its position entirely.
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Posted by Marc Mayerson at April 22, 2005 3:54 PM | Comments (2)
Better by Fax? Perfecting Coverage under Notice-of-Circumstances Provisions of Claims-Made Policies
Many claims-made liability-insurance policies have an important extension of coverage that enables a policyholder to lock in coverage in one year – the year that a bad situation is discovered that later may produce claims– even though claims against the insured arising from the situation are not made until after the policy period. Under “notice of circumstances” provisions, an insured can provide written notice of such a circumstance to its claims-made carrier and later-asserted claims will be deemed to have been made during the policy period in which "notice of circumstances" was given.
Posted by Marc Mayerson at April 9, 2005 3:49 PM | Comments (1)
Silica Bodily Injury Claims: 'Polluting' the Injured ?
The California Court of Appeal recently held that bodily injury claims arising from workplace silica exposure were the result of pollution, the coverage for which was barred by an absolute pollution exclusion. Garamendi v. Golden Eagle Ins. Co. (March 9, 2005). Importantly, and a distinction that will be lost in the sands of time, the decision effectively employs an abuse-of-discretion standard to evaluate the decision of a claims determination of an insurer in liquidation.
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Posted by Marc Mayerson at March 11, 2005 4:19 PM | Add New Comment
Insurer Subrogation Against Product Manufacturers
When an insurance company pays a first-party claim, it ordinarily is thought to succeed to the insured’s rights as against others who may be responsible for the loss. This is known as subrogation, and virtually all policies expressly provide in the insurance contract that the insured’s rights are transferred to the insurance company. (This is legal subrogation; a claim for subrogation may be found by dint of the insurer’s payment even in the absence of a contract provision, which is called equitable subrogation.)
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Posted by Marc Mayerson at March 9, 2005 4:20 PM | Add New Comment
Food-Related Losses and Insurance
The courts continue to construe insurance coverage very broadly regarding food-related losses. See Mayerson, Insurance Recovery for Losses from Contaminated or Genetically Modified Foods, 39 Tort Trial & Ins. L. J. 837 (2004), available at http://www.spriggs.com/news/pdfs/ACF6453.pdf Insurance companies need to be mindful in handling claims that the courts for decades have approached these coverage disputes this way.
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Posted by Marc Mayerson at March 8, 2005 10:00 AM | Comments (3)
Issues in Terrorism Insurance
One of the best insurance publications I’ve read is a paper on terrorism insurance that was published by MunichRe shortly after 9/11. http://www.munichre.com/publications/302-03092_en.pdf It still pays reading today in that it addresses the issues surrounding terrorism lucidly.
Posted by Marc Mayerson at February 9, 2005 3:52 PM | Add New Comment
Equitas Financial Reports – 2004 Version
As is well known, Equitas Ltd. manages the run off of liabilities under non-life insurance policies issued by underwriters at Lloyd’s, London, prior to 1993, and these policies are exposed to paying for liabilities of US companies for certain asbestos, environmental, and other “health hazard” claims of injury or damage that occurred in the period of their coverage. Each year, Equitas publishes its financial results as of 31 March (for 2004, its Reports and Accounts were released in late June but were dated 3 June 2004) and provides additional commentary via an accompanying press release (dated 8 June 2004).
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Posted by Marc Mayerson at June 25, 2004 6:24 PM | Add New Comment