Sep 22 2017

MM Insurance News 9/22/17

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CASES OF CONSEQUENCE

ALABAMA Jurisdiction/Declaratory Relief/Forum Non Conveniens

The Alabama Supreme Court has issued a pair of decisions analyzing jurisdictional issues for declaratory relief cases. In Ex Part Dow Corning Alabama, Inc., No. 116028 (Ala. Sept. 1, 2017), the court disputed a mandamus petition from Dow Corning and Zurich American that would have ordered the transfer of a DJ involved an additional insured’s rights pursuant to the “interests of justice” prong of the Alabama forum non conveniens statute, Section 6-3-21.1. At the same time, the court granted an auto insurer’s mandamus petition in Ex Parte Alfa Mut. Ins. Co., No. 1160526 (Ala. Sept. 1, 2017), ruling that the interests of justice required that a DJ involving an accident victim’s UM claims be tried in the county where the accident occurred and not whether the accident victim resided.

CONNECTICUT First Party/Crumbling Foundation Claims

A federal district court ruled in England v. Amica Mut. Ins. Co., No. 16-1951 (D. Conn. Sept. 11, 2017) that the homeowner’s claim should be dismissed as allegations of the “progressive deterioration” of the insured’s foundation could not support any finding of an “abrupt” collapse. In his opinion, Judge Shea also rejected the insured’s effort to find coverage on the basis of a “chemical reaction.” The court found that the insured “cannot plausibly allege that the ‘loss’ was chemical reaction itself while at the same time alleging that the ‘loss’ consists of damages caused by a chemical reaction.” Rather, the court found that while the resultant cracking was a “direct physical loss,” the chemical reaction itself, absent any physical manifestation in the property marking a change to an unsatisfactory state, is not a covered “direct physical loss” or “loss.”

ILLINOIS Construction/Additional Insureds

As with its recent rulings in Centex Homes and CSR Roofing, the First District has ruled in Pekin Ins. Co. v. Lexington Station, LLC, 2017 IL App (1st) 163284 (Ill. App. Aug. 14, 2017) that the liability insurer of a contractor owed a defense to a property owner because the underlying allegations in this case creating a possibility that the contractor was negligent and that the owner was vicariously liable for that negligence.

PENNSYLVANIA Construction Litigation/”Occurrence”

A federal district court has ruled in Northridge Village LP v. Travelers Indemnity Company of Connecticut, No. 15-1947 (E.D. Pa. Sept. 1, 2017) that Travelers does not owe coverage for allegations brought against two real estate investment companies based upon improperly constructed community infrastructure as contract-based claims are not "occurrences" in Pennsylvania.

VIRGINIA Auto/Third Party Claims/Assignments

The Virginia Supreme Court has ruled that a trial court erred in ruling that a health care provider was entitled to recover against an auto insurer based upon an assignment of rights from an auto accident victim. In Erie Ins. Co. v. McKinley Chiropractic Center, P.C., No. 161172 (Va. Sept. 14, 2017) that injured parties may only recover parties from the tortfeasor’s insurer after obtaining a judgment against the insured. In this case, the assignor not only never obtained a judgment but executed a release with the tortfeasor’s insurer, releasing all of its rights.

WASHINGTON Bad Faith/Tripartite

The Washington Supreme Court has ruled that a Seattle defense firm was not ethically conflicted from accepting the defense of the policyholder claimant merely because the firm had a longstanding relationship with the insurer that had hired it, including numerous direct representation of that insurer in first party coverage disputes. In Arden v. Forsberg & Umlauf, P.C., No. 932070-7 (Wash. Sept. 14, 2017), Arden argued that the Forsberg firm should have disclosed their links to The Hartford at the time that they were hired to represent him. Unlike its earlier holding in Tank, which had imposed a heightened duty on insurance defense counsel in disputed coverage cases, the court ruled that there was no “inherent conflict” presented by counsel’s engagement, particularly as The Hartford did not issue a reservation of rights until months after counsel had been appointed and because The Hartford had made active efforts to settle the case even after issuing the RoR. The court found no evidence that the firm had favored The Hartford over their insured client or that the insured had suffered any negative consequences due to this lack of disclosure.

WYOMING Auto/UIM/”Occurrences”

In a case of first impression, the Wyoming Supreme Court has adopted the “cause” theory for determining whether damages owed to multiple injuries parties implicate one or more “occurrence” limits. In Hurst v. Metropolitan Prop. & Cas. Co., S-17-0082 (Wyo. Sept. 12, 2017), the court ruled that an incident in which an underinsured motorist collided with two bicyclists, killing one and severely injuring the other, was a single “accident” that only triggered the $300,000 UM limit in the bicyclists’ auto policy. Notwithstanding the insureds’ argument that an “effects” tests should apply triggering two separate limits, the court ruled that the “cause” approach was consistent with Wyoming tort law and the public policy underlying UIM coverage.

OTHER DEVELOPMENTS OF NOTE

* * * Inside the Insurance Industry * * *

Lloyd’s CEO Inga Beale has predicted in an interview that reinsurers must anticipate that “normal level of returns are going to be lower than we’ve traditionally anticipated,” citing the impact of alternative capital, ILS funds and investors.

Chubb has announced plans to relocate its European headquarters across the Channel to France. XL Group Ltd. has also announced that it will move XL Insurance S.E. from London to Dublin in response to Brexit.

Gregg Cunningham, who has served as the chief underwriting officer for Travelers’ Middle Market Property division since 2012, will be the new head of Liberty Mutual’s National Insurance Property division.

* * * Cyber * * *

Massachusetts has become the first state to sue Equifax for failing to protect confidential data in the wake of last Spring’s cybertheft.

* * * Hurricanes * * *

Property insurers in Florida are now estimated to face over $2 billion in claims from nearly 400,000 policyholders. It is estimated that only about 20% of the flood losses in Florida will be covered by property insurance. Meanwhile, the Florida Office of Insurance Regulation issued a press release encouraging policyholders “to be prompt in notifying their insurers and cautious of repair deals that sound too good to be true.”

* * * Across the Bar * * *

Seven toxic tort lawyers from Segal McCambridge’s Philadelphia office have decamped to the greener pastures of Goldberg Segalla.

* * * IBNR Dept. * * *

The son of the late great jazz pianist Thelonious Monk has sued the North Coast Brewing Company alleging that its "Brother Thelonious Belgian-style Abbey Ale” infringes his father's intellectual property by using Monk's image without the estate's permission.

* * * Must See CLE * * *

DRI Annual Meeting (Chicago): October 4-8, 2017

FETTI Annual Claims Conference (Chicago): October 4-6, 2017

DRI Northeast Insurance Industry Claims Conference (Hartford): November 2, 2017

2017 FDCC Insurance Industry Institute (New York City): November 9-10, 2017

DRI Insurance Coverage and Practice Symposium (New York City): December 6-8

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