Jan 23 2018

MM Insurance News 1/23/18

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SECOND CIRCUIT D&O/”Customer”/Professional Services (NY)

In a dispute between NASDAQ’s second level E&O carriers and the insured’s D&O insurers concerning the availability of coverage for law suits by investors arising out of the stock exchange’s mishandling of the rollout of Facebook’s IPO, the Second Circuit has affirmed a New York District Court’s ruling that retail investors are “customers” of a stock exchange and that their claims were therefore subject to a “professional services” exclusion in the D&O policies for claims by “customers.” Despite the absence of any definition of “customer” in the ACE D&O policy, the court ruled in Beazley Ins. Co. v. ACE American Ins. Co., No. 16-2812 (2d Cir. Jan. 22, 2018) that extending its meaning to retail investors was consistent with the custom and usage of that term in the securities industry and federal law.

SECOND CIRCUIT Estoppel/Auto Exclusions (NY)

The Second Circuit has ruled in Citizens Ins. Co. v. Risen Foods, LLC, No. 16-4166 (2d Cir. Jan. 22, 2018) that a New York District Court erred in declaring that a general liability insurer was estopped by Section 3420(d) to contest coverage for an insured’s auto accident. The court ruled that the addition of a “Hired or Non-Owned” Auto endorsement did not create coverage or ambiguity, since this loss clearly involved an owned vehicle, and that the absence of coverage here reflected the insuring agreement and was therefore not subject to Section 3420(d).

CALIFORNIA Independent Counsel

The Third Appellate District has ruled that a property developer is not entitled to “Cumis” counsel. In Centex Homes v. St. Paul Fire & Marine Ins. Co., C081266 (Cal. App. Jan. 22, 2018), the Court of Appeal upheld the Superior Court’s declaration that the mere possibility of a conflict is insufficient to trigger the provisions of Section 2860. Further, the court refused to find that Section 3-310(C)(1), which requires an attorney to consult with clients and obtain their written consent in the event of a potential conflict, applied under the circumstances.


In a dispute between homeowners and business owner’s policies issued to famed attorney Alan Dershowitz, a federal district court has ruled in Privilege Underwriters Reciprocal Exchange v. The Hanover Insurance Group, No. 16-61742 (S.D. Fla. Jan. 19, 2018) that summary judgment must enter for Hanover as, despite PURE’s claim that its policy was excess to Hanover’s business policy, PURE had failed to establish that the underlying claims for defamation were covered by Hanover.

IOWA Trigger of Coverage/Duty to Defend

A federal district court has granted summary judgment to a window manufacturer, ruling in Pella Corp. v. Liberty Mut. Ins. Co., No. 11-273 (S.D. Iowa Jan. 16, 2018) that its insurer’s duty to defend was triggered under policies from the date that the windows were first installed, despite the insurer’s claimed evidence that water damage had not occurred until years later.

OREGON Bad Faith

On a certified question from the Ninth Circuit, the Oregon Supreme Court has ruled in Bates v. Bankers Life & Cas. Co., 362 Or. 337 (Or. Jan. 19, 2018) that allegations that an insurance company, in bad faith, delayed the processing of claims and refused to pay bene-fits owed to vulnerable persons under an insurance contract do not state a claim under ORS 124.110(1)(b) for wrongful withholding of “money or property.”


* * * Inside the Insurance Industry * *

After years of retrenchment, AIG is taking a major step forward in agreeing to pay $5.56 billion to buy Bermuda-headquartered reinsurer and asset manager Validus Holdings Ltd.

Following on the heels of its acquisition of Ironshore, Liberty Mutual has announced plans to merge Ironshore with its global specialty and global reinsurance strategy groups together with National Insurance into a single entity: Global Risk Solutions (GRS). GRS will be headed up by Dennis Langwell, who is currently Liberty Mutual’s CFO. Liberty Mutual also plans to combine its Global Consumer Markets with its Business Insurance and Accident & Health (A & H) groups under the heading of Global Retail Markets (GRM).

Travelers reports that its underwriting income for the last quarter of 2017 was less than half the amount earned for the same period in 2016.

QBE reports that it will likely suffer an after-tax loss of $1.2 billion in 2017 due to cat losses, reserve strengthening and write-downs.

Marsha has filed a claim with the UK Intellectual Property Office demanding that fledgling insurance start up “Marshmallow” cease infringing its trademarked name.

* * * Opioids * * *

The State of Delaware has sued Purdue Pharma, Endo International, CVS and Walgreens for illegally marketing opioids. Meanwhile, the State of Kentucky filed suit this week against McKesson Corporation.

* * * Cyber-Practice * * *

Here is the latest issue  of MM’s Cyber-Practice newsletter.  

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