Nov 3 2017

MM Insurance News 11/3/17

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NOTEWORTHY NEW RULINGS

SECOND CIRCUIT Bad Faith (NY)

The Second Circuit has ruled in Sea Tow Services Int’l, Inc. v. St. Paul Fire and Marine Ins. Co., No. 16‑3672 (2d Cir. Oct. 27, 2017) (unpublished) that Travelers did not act in bad faith in its adjustment of claims arising out of a boating accident. Noting that “establishing that an insurer has acted in bad faith when settling a claim can be a tough road to hoe under New York law", the Second Circuit found that in this case there was no evidence of any lost opportunity to settle and that in the end, St. Paul was able to achieve a global settlement within policy limits.

ELEVENTH CIRCUIT Suit Limitations Periods (GA)

The Eleventh Circuit has ruled in A+ Restorations, Inc. v. Liberty Mutual Fire Ins. Co., No. 16-122 (11th Cir. Oct. 24, 2017) that an exterminator’s claim against a homeowner’s insurer for the cost of removing raccoons from the insured’s premises was barred by language in the policy requiring that any suit be brought within two years of the date of loss.

GEORGIA “Garage Operations”/Additional Insureds”

The Georgia Court of Appeals has ruled in Blue Ridge Auto Auctions, Inc. v. Acceptance Ind. Ins. Co., No. A17A0840 (Ga. App. Ct. Oct. 24, 2017) that a company that was driving vehicles at a charity auction in an accident that injured bystanders was entitled to a defense under a liability policy issued to the charity that was running the auction. Despite the insurer’s argument that the named insured was a charitable foundation, the Court of Appeals focused on the fact that its business was listed in the policy as a “used auto dealer,” which encompassed auto sales. As a result, the court ruled that the transportation of the vehicle in question arose out of covered “garage operations.”

ILLINOIS Discovery/Privilege/Duty to Cooperate

In the latest discovery ruling arising out of “clean room” coverage disputes between Motorola and its liability insurers, the Appellate Court has ruled that a trial court erred in directing Motorola to turn over numerous internal assessment of its potential legal exposure. Whereas the Supreme Court had ruled in Waste Management that the “common interest” doctrine obliged an insured to provide defense counsel’s reports and other privileged documents with its liability insurers, even if the carriers are disputing their coverage obligations, the First District declared in Motorola Solutions, Inc. v. Zurich Ins. Co., 2017 IL App (1st) 161465 (Ill. App. Ct. Oct. 25, 2017) that the discovery requests in this case pertained to documents created years before the “white room” litigation began. The Appellate Court also refused to find that the production of these materials was required by the policies’ cooperation clauses, as there was no reason to believe that any of these documents would assist the insurers in defending or settling the underlying claims. Justice Lampkin dissented, arguing that Waste Management precluded the assertion of the attorney-client privilege in these circumstances.

MONTANA Declaratory Relief/Attorney's Fee

The Montana Supreme Court has ruled in Mlekush v. Farmers Insurance Exchange, 2017 MT 256 (Mont. Oct. 24, 2017) that where an insured is compelled to sue her auto insurer for UIM benefits and recovers more at trial than the insurer's last offer she should be entitled to recover his or her attorney's fees for pursuing the action.

OTHER DEVELOPMENTS OF NOTE

* * * Inside the Insurance Industry * * *

A new Treasury Department report entitled "A Financial System that Creates Economic Opportunities: Asset Management and Insurance" surveys the current state of insurance markets and recommends that steps be taken to increase evaluation of systemic risk and insolvency; more efficient regulation to decrease regulatory burdens and maximize product and service offerings; rationalizing U.S. engagement in international firms to promote U.S. asset management and insurance industries and enhancing consumer access to a variety of relevant products and services.

Chubb reported a net loss of $70 million in the third quarter of 2017, down from a net profit of $1.3 billion the year before.

Fitch Ratings revised its rating for XL Group to negative following XL’s announcement that it suffered a $1 billion loss in the third quarter of 2017.

* * * Cyber * * *

AIG has announced plans to make some cyber liability coverage a standard part of its commercial liability insurance package starting in 2018.

* * * The New Face of Privacy Litigation * * *

Over two dozen class action suits are now pending in Illinois seeking recovery for alleged violations of the state Biometric Information Privacy Act.

* * * California on Fire * * *

Aon Benfield predicts that insured losses due to the wildfires in Northern California will range between $6 and 8 billion.

* * * Avoiding Catastrophe * * *

On the fifth anniversary of Superstorm Sandy, Climate Central has published a list of the cities deemed most vulnerable to coastal flooding, led by New York, Philadelphia, Houston, Baltimore and Miami. Meanwhile, BestPlaces recommends Portland, Oregon as the safest place in America to avoid a natural catastrophe (other than tofu and deranged baristas).

* * * New Coverage Litigation * * *

AIG has filed suit against the Walt Disney Company in New York, seeking a declaration that it does not owe coverage for sums that Disney paid to settle allegations that an ABC News “pink slime” expose defamed Beef Products, Inc. Disney has filed its own claim in California, alleging in Walt Disney Co. v. AIG Specialty Ins. Co., No. 17-7598 (C.D. Cal.) that the issue of coverage must be decided by arbitration.

* * * Across the Bar * * *

American Lawyer reports that merger talks between Clyde & Co. and Sedgwick have run aground as the result of the departure of key Sedgwick partners and layoffs.

* * * Must See CLE * * *

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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