Nov 8 2019

Insurance Law – 11/8/2019


CASES OF CONSEQUENCE

FOURTH CIRCUIT    Declaratory Relief/Jurisdiction (SC)

The Fourth Circuit has ruled that a South Carolina district court should have abstained from ruling in a declaratory judgment action involving claims arising out of an automobile accident since the coverage case would require the resolution of factual issues that might have preclusive effect in the underlying tort case. In Trustgard Insurance Company v. Collins, No. 18-2187 (4th Cir. Nov. 5, 2019), the court also questioned that there was a justiciable controversy between the parties sufficient to sustain Article III jurisdiction in light of the fact that there was merely a hypothetical possibility that a judgment might result in the underlying action that would thereby trigger an indemnity obligation on its part. The court distinguished cases involving a claimed duty to defend from those such as these, where all that was at issue were advisory opinions as to the possibility of an indemnity obligation in the event that the insured was found to be liable in the underlying case.

DELAWARE    “Securities” Litigation

The Delaware Supreme Court has ruled in In Re Verizon Insurance Coverage Appeals, No. 558, 2018 (Del. Oct. 31, 2019), that a trial court erred in failing to interpret the term “securities claims” within the context of securities statutes and regulations. In ruling that Verizon was not entitled to coverage for a bankruptcy trustee’s claims for breach of fiduciary duty, unlawful dividend and fraudulent transfer claims arising out of the disastrous 2006 spinoff of its print directory, the high court agreed with Verizon's insurers that the term "regulating securities" limited coverage to specific securities activities, as opposed to matters of general applicability. Whereas, Verizon had argued that definition of “Securities Claims” as a violation of "any regulation, rule or statute regulating securities" should be given broad scope, the court emphasized that these words were aimed at a particular legal area – securities law – and was not meant to be a general application to other areas of the law. The court also rejected Verizon's contention that "rules" regulating securities should also encompass "common law rules."

MARYLAND    Allocation

The Maryland Court of Appeals heard oral argument this week in Rossello v. Zurich American Insurance Company. At issue is whether Zurich is obliged to pay the full amount of a nearly $3 million judgment that Rossello recovered against its policyholder. A lower court had ruled that Zurich was only required to pay its pro rata share of the loss.

NEW JERSEY    Auto/UIM/Additur

In a case where a trial judge entered an additur that increased the amount of personal injury damages awarded to a motorist but nonetheless resulted in the dismissal of her UIM claim against Allstate, the New Jersey Supreme Court has ruled in Orientale v. Jennings, No. A-43-17 (N.J. Sept. 23, 2019) that a new trial should have been ordered since the insured objected to the additur. In an effort to reconcile the practices of "additur" and "remittitur", the Supreme Court ruled that such doctrines are only binding upon the parties if they accept them. If one party accepts the revised award but the other rejects, a new trial must follow.

NEW YORK    Environmental/”Pollution Condition”

A Federal District Court has ruled in James River Ins. Co. v. Indian Harbor Ins. Co., No. 18-767 (S.D.N.Y. Octo. 18, 2019) that neither James River or its insured Certified Safety were entitled to recover under a professional liability policy issued by Indian Harbor as the insured's alleged negligence with respect to monitoring working conditions at the site did not cause a "pollution condition" triggering the policy. Judge Oetken declined to grant summary judgment to Indian Harbor with respect to other issues due factual questions with respect to whether notice to the insurance agent was binding on Indian Harbor and whether the acts in question involved covered "professional services."

OTHER DEVELOPMENTS OF NOTE

Inside the Insurance Industry

Ironshore has announced that Thomas Leahy will be the new President of IronPro, the company’s professional and management liability division.

Mark Watson, has stepped down as Argo Group's CEO in the face of an ongoing SEC investigation of Argo's executive compensation practices. Kevin Rehnberg has been named interim CEO subject to the approval of Bermuda regulators.

Lockton has named Peter Clune as its new chief executive officer succeeding Ron Lockton, who is taking on the role of chairman effective May 1, 2020.

Hartford's third-quarter results reflect an increase of 21 percent from the year before. CEO Christopher Swift declared that the increase was due to "strong property casualty margins, excellent group disability results, and solid investment returns …".

New Coverage Litigation

A group of consumers who recovered a $267 million class action judgment against a debt collection agency that had repeatedly sent them unauthorized robocalls have now filed suit against the liability insurers of Rash Curtis & Associates seeking coverage for their judgment. In Perez v. Indian Harbor Insurance Company, XL America Inc. and XL Group Ltd., Case No. 19-7288 (N.D. Cal.) the plaintiffs argue that XL and related entities acted in bad faith by rejecting offers to settle for as little as $60,000 and walked out of a mediation without making any settlement offer at all.

California Burning

Evan Greenberg asserts that Chubb is likely to avoid a large-scale financial exposure to losses arising out of the latest wildfires in California as the result of a combination of better underwriting changes in its risk portfolio and its purchase of facultative reinsurance for such loss. “Though it began two years ago, really it’s been the last year we’ve been reshaping the portfolio, given the underwriting environment and level of rate we can charge,” Greenberg said. “We have aggressively pursued more rate increases, and that earns into the portfolio and has a benefit.”

New Coverage Litigation

A group of consumers who recovered a $267 million class action judgment against a debt collection agency that had repeatedly sent them unauthorized robocalls have now filed suit against the liability insurers of Rash Curtis & Associates seeking coverage for their judgment. In Perez v. Indian Harbor Insurance Company, XL America Inc. and XL Group Ltd., Case No. 19-7288 (N.D. Cal.) the plaintiffs argue that XL and related entities acted in bad faith by rejecting offers to settle for as little as $60,000 and walked out of a mediation without making any settlement offer at all.

Must See CLE

DRI Insurance Coverage and Practice Symposium
New York City
December 5-7, 2019

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