Marine insurance market
Insurance Scrawl
Commentary on the law of insurance, the insurance of business, and the business of insurance. A weblog by policyholder lawyer Marc Mayerson.
- 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.
- 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.
- 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.
- 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."
- 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.
- 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 remai
