Feb 14 2018

MM Insurance News 02/14/18

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NOTEWORTHY NEW RULINGS

FOURTH CIRCUIT       “Hole in One Insurance”/Reasonable Expectations (WVA)

The Fourth Circuit has sustained a lower court’s ruling that a specialty insurer was not required to cover $100,000 prizes that were paid to two golfers who hit a hole in one at a Pro Am event at the famed Old White golf course at the Greenbrier Resort. As both shots were struck from 137 yards, whereas the policy stipulated that the hole must be at least 150 yards from the tee, the Court of Appeals ruled in All Risks, Ltd. v. HCC Specialty Underwriters, No. 17-1180 (4th Cir. Dec. 20, 2017) that the insured was clearly not entitled to coverage, nor could it claim that it had a reasonable expectation of coverage.

SEVENTH CIRCUIT       Fire Insurance/Depreciation/Actual Cash Value (IN)

The U.S. Court of Appeals for the Seventh Circuit has ruled that an Indiana District Court did not err in refusing to give it judgment as a matter of law following a jury’s verdict that the insured was entitled to recover $87,000 after a fire burned down the insured residence. Despite the insurer’s arguments that the claimant was not an insured, the court ruled in Thorne v. Member Select Ins. Co., No. 17-1377 (7th Cir. Feb. 12, 2018) that Thorpe, while only infrequently in residence in the insured residence, nonetheless had sufficient contacts with the property for a jury to have ruled that it was his “residence.” Further, in adopting the “broad evidence” ruling for calculating the value of the lost home, the court rejected the insurer’s argument that “actual cash value” means “replacement cost less depreciation.” Applying this “broad evidence” rule, the Seventh Circuit declared that the jury was entitled to rely on the owner’s opinion testimony with respect to the value of the house.

SEVENTH CIRCUIT       Bad Faith/Health Insurance (IL)

The U.S. Court of Appeals for the Seventh Circuit has ruled in Newman v. Metropolitan Life Ins. Co., No. 17-1844 (7th Cir. Feb. 6, 2018) that an Illinois District Court erred in dismissing an elderly policyholder’s law suit against her long-term care insurer for allegedly violating the Illinois Consumer Fraud and Deceptive Practices Act by doubling her insurance premiums despite promises to the contrary in the brochure that MetLife provided to the insured before she purchased the policy.

TENTH CIRCUIT       “Occurrence”/Business Risk Exclusions (KS/NY)

The U.S. Court of Appeals for the Tenth Circuit has ruled in Black & Veatch Corp. v. Aspen Ins. Co. (UK), No. 16-3359 (10th Cir. Feb. 13, 2018) that faulty workmanship by a subcontractor that resulted in the failure of emissions scrubbing equipment that the insured had contracted to install at several coal-fired power plants triggered CGL coverage under New York law. In an exceptionally long opinion tracing the evolution of the “your work” exclusion in the CGL policy form, the Tenth Circuit reversed a Kansas District Court’s entry of summary judgment for Aspen and declared instead that this damage resulted from an “occurrence” and that the insured’s own work exclusion did not apply where, as here, the damage resulted from the faulty workmanship of a subcontractor.

ILLINOIS       Auto/UIM/Stacking

The Appellate Court has ruled that anti-stacking language in the UIM provisions of a personal auto policy only applied to separate coverages and did not preclude an insured from stacking the $25,000 “per occurrence” limits that applied separately to the four vehicles insured under the policy. In Taylor v. Elephant Ins. Co., 2018 IL App (5th) 170072 (Ill. App. Feb. 6, 2018), the Fifth District emphasized that separate limits were set forth in the policy as applying to each vehicle and a separate premium was charged for each.

OTHER DEVELOPMENTS OF NOTE

 * * * Inside the Insurance Industry * * *

There isn’t much good news for property and casualty insurers in A.M. Best’s latest Market Segment Report. The Report predicts a 2017 underwriting lloss of $29.3 billion that will cause pre-tax operating income to fall to $14.8 billion compared to $41.1 billion in 2016. The industry’s combined ratio is also predicted to rise from 2016’s 100.9 to 105.1. The National Association of Insurance Commissioners released State Ahead last week, a 34 page strategic plan that is intended to guide NAIC’s efforts over the next three years. AIG reported last week that it suffered a $6.66 billion loss in the fourth quarter of 2017 due to a one-time charge occasioned by new changes in U.S. tax law. Allianz SE is reported to be eyeing Bermuda-based XL Group as an opportunity to expand its casualty insurance business in the United States.

Reuters reports that several insurers notably XL, Catlin, Chubb and MSI have agreed to provide insurance coverage protection for crypto currency theft claims.

* * * New Coverage Litigation * * *

American Guarantee has filed suit against Chubb, alleging in American Guarantee Liabitilty Ins. Co. v. ACE American Ins. Co., No. 18-382 (N.D. Tex.) that the primary insurer bears liability beyond its policy limit due to its failure to settle a wrongful death action against their mutual insured.

* * * Litigation Finance Update * * *

The Georgia Supreme Court is now considering Ruth v. Cherokee Funding LLC, a case that will provide the court with an opportunity to consider whether litigation financing arrangements constitute a "loan" under Georgia state law and are therefore subject to regulation. The case is due to be argued next May.

* * * Tort Reform Developments * * *

The West Virginia state senate has approved HB 4013 that would preclude out-of-state plaintiffs from filing suits in West Virginia for injuries that occurred elsewhere. A similar "litigation tourism" prohibition was approved unanimously last month by the state's House of Delegates.

* * * Across the Bar * * *

Andrews Kurth Kenyon LLP and Hunton & Williams LLP are rumored to be in the final stages of merger talks.

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