Category Archives: Legal Environment

CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/27/2020)

Accounting Rules
NAIC Working Group Approves Flexible COVID-19 Accounting Rules
Automobile Insurance
How the Coronavirus Could Change U.S. Personal Auto Insurance
Business Interruption
Travelers, Insured Law Firm Spar Over Civil Authority Business Income Loss Claim
States Seek to Force Insurance Companies to Pay Those With Business Interruption Policies
Covid-19 Business Interruption Existential Threat, Reinsurance Capital Availability Key: Willis Re
Credit Insurance
Governments should backstop trade credit
Litigation
The Race Is on to Lead Business Interruption Insurance Litigation
What Won’t Cure Corona: Lawsuits
6 Types Of Employment Lawsuits To Expect In The Wake Of COVID-19
Editorial: Stopping a Lawsuit Epidemic
Kudlow: Businesses shouldn’t be held liable for employees and customers getting coronavirus
Corporate America Seeks Legal Protection for When Coronavirus Lockedowns Lift
Profits & Losses
Coronavirus Costs Weigh on Travelers’ Profit
Coronavirus Will Be Largest Event in Insurance History, Says Chubb CEO
Coronavirus To Be Largest Industry Loss Ever: Chubb’s Greenberg & Lloyd’s Neal
Covid-19 P&C Insurance Industry Loss Estimated $40bn – $80bn: Dowling
Chubb Classifies Covid-19 as a Catastrophe Event
Covid-19 Claims Manageable, But Reinsurers Face Formidable Challenges: Willis Re
Specialty Lines
Companies Can Expect Higher D&O Rates, Lower Limits: Experts
Lack of Adequate Insurance Puts Healthcare Workers At Risk of Malpractice Lawsuits
Workers Compensation
States Easing Path to Workers Compensation Benefits for Coronavirus Workers
Changing Virus Guidance Creates Balancing Act For Essential Employers
Employers Pushing Back as States Expand Work Comp to Cover COVID-19
Workplace Safety For COVID-19 Essential Workers
From the Triple-I Blog:
TRIPLE-I CEO AMONG PANELISTS DISCUSSING BUSINESS INTERRUPTION INSURANCE LEGISLATION
INSURERS RESPOND TO COVID-19 (4/24/2020)
CORONAVIRUS WRAP-UP: LIFE AND HEALTH INSURANCE (4/22/2020)
CORONAVIRUS WRAP-UP: DATA AND VISUALIZATIONS (4/20/2020)

CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/22/2020)

Automobile Insurance
Erie Insurance Offering $200M dividend to Auto Insurance Customers Amid Pandemic
If Miles Driven Are Down, Why Are U.S. Auto Crashes Up?
Business Interruption
Federal Lawsuits Target Insurers Over COVID-19 Business Interruption Claims
Covid-Fueled Supply Chain Disruption a Crunch Point for Insurance Claims
Businesses Contemplating Reopening Fear Lawsuits From Sick Patrons
Cannabis
20 Ways to Address Marijuana Reform Amid COVID-19
Directors & Officers
Top Exec With Coronavirus a Reportable Event? It All Depends
Financial and Business Impact
A.M. Best Forecasts Hit to Insurer Capital from Equity Exposures
Fraud
Pandemic Has Scam Artists Out in Full Force
Litigation
‘Act of God’ Disputes Are on Upswing
Travelers Hits Back With COVID-19 Claims Denial Suit
Fed-up Nurses File Lawsuits, Plan Protest at White House Over Lack of Coronavirus Protections
Travel Insurance
Impact of Covid-19 on Corporate Travel, Recovery & Way Forward
Cruise Ship Virus Losses May Hit Marine Liability Insurers
Workers Compensation
CA Virus Comp Costs Projected to Reach as High as $33.6B
Employers May Exclude Payroll to Employees Not Working for Workers’ Comp: NCCI
COVID-19 Presumptions May Lead to Billions in Workers’ Comp Losses

CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/21/2020)

Automobile Insurance
Acting on ‘Thin’ Data, Auto Insurers Retain Flexibility With Premium Credits
Speeders Take Over Empty Roads — With Fatal Consequences
Business Interruption
Triple-I Economists: Enforced COVID-19 Business Interruption Payouts Would Damage Industry
Fight Over Pandemic Insurance Intensifies
Restaurants vs. Insurers Shapes Up as Main Event In D.C. Lobbying Fight
Cyber Risk
Hacking Against Corporations Surges as Workers Take Computers Home
Directors & Officers
D&O Insurance May Help Non-Public Companies With COVID-19 Claims
Financial Impact
Despite Recent Market Rally, Pandemic Will Continue to Hit Insurers’ Investments
COVID-19 to deter M&A activity in 2020: Conning
Kidnap & Ransom
Pandemic Exposes Organizations to Kidnap for Ransom Risk
Litigation
U.S. Businesses Bring Wave of Class Action Lawsuits Against Insurance Companies for Denial of Business Interruption Claims in Wake of COVID-19Pandemic
Hiscox Faces Legal Action From Chef Raymond Blanc: Reports
Ending Virus Shutdowns Too Soon Poses Legal Risk for Businesses
Reinsurance and Insurance-Linked Securities
Lack of Exclusions, Poor Wordings the COVID-19 BI Threats to Reinsurers & ILS
Workers Compensation
Utah Passes Bill to Provide First Responders With Comp for COVID
Comp Premiums Likely to Dip as Employment Declines: NCCI

From The Triple-I Blog:
MIXED REACTIONS TO WORKERS COMP COVID-19 EXPANSIONS

CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/17/2020)

Auto Insurance
Stay-at-home Pandemic Orders Reduce Auto Claims Almost by Half
As Coronavirus Empties Streets, Speeders Hit the Gas
Business Interruption
UK Watchdog Orders Insurers to Pay Small Business Claims Quickly
Cannabis Insurance
Pandemic Could Shrink Cannabis Insurers’ Premiums, Market
Cyber Insurance
Preventing Losses Due to Growing Cyber Crime During Coronavirus Crisis
As Attacks Rise, Paladin Offers Cybersecurity Platform Free to Insurance Agencies
Disaster Preparedness
‘Uncharted Territory’ as Wildfire Fighting Adapts to Pandemic
Insurance-Linked Securities
Artemis Live: Interview with Tom Johansmeyer, Head of PCS
Litigation
Nashville Bar Sues Insurer Over COVID-19 Loss Claim. Experts Say It Won’t Be the Last
Businesses Warn Fear of Liability Lawsuits Could Stall Rebooting of Economy
P/C Industry Impact
Suddenly There is Big Demand for Pandemic Cover, Says Underwriter
Chubb CEO: Forcing Insurers to Pay Pandemic Loss Claims is ‘Plainly Unconstitutional’
Allianz CEO: Pandemic Hit “Like a Metororite”
From Hacker Attacks to Shareholder Lawsuits, Insurance Industry Braces for COVID-19 Fallout
Public Health and Safety
What FDA Says About Food Safety Amid COVID-19
Travel Insurance
Travelers Consider Their Risk Tolerance
HOLIDAY HELL How to Get a Refund on Your Holiday if it’s Cancelled and How Long Should it Take to Get Cash Back
Workers Compensation
Workers Compensation in Wake of COVID-19

From the Triple-I Blog:
INSURERS RESPOND TO COVID-19 (4/17/2020)
TRIPLE-I BRIEFING: SURPLUS IS KEY TO INSURERS KEEPING POLICYHOLDER PROMISES
PUTTING CAR INSURANCE PRICES INTO PERSPECTIVE

CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/16/2020)

Legislation and regulation
Democrats Plan Legislation to Force Insurance Companies to Pay Out for Pandemic Losses
Thompson Introduces the Business Interruption Insurance Coverage Act
Lawmakers Advocate Stimulus Aid to Insurers on Business Interruption
SC Proposes Bill Over Coronavirus-related Business Interruption Claims
NJ offers grace period for insurance premium expenses
Coronavirus Regulations: A State-By-State Week In Review
Litigation
COVID-19, business interruption and bad faith litigation
P/C Industry Impact
No Evidence COVID-19 Industry Loss Will Match Large Catastrophe Years: Flandro
How Insurance Claims Pros Are Adjusting to Pandemic Complications
COVID-19 Response ‘Could Bankrupt the Insurance Industry’: Insurance Defense Lawyer
Coronavirus response: Short- and long-term actions for P&C insurers
Auto Insurance
Analysts: Auto Insurance Coronavirus Rebates a Solid Move in Short Term
Will Fewer Drivers on the Road Mean Lower Auto Losses? It Depends
Auto Insurers Offer Rebates as Traffic Abates During Pandemic
Business Interruption
Neglecting Idle Facilities Amid COVID-19 Will Cost Companies, Warns FM Global
Cyber
Working From Home? Don’t Let Cyber Criminals Break In
Hospital Hackers Seize Upon Coronavirus Pandemic
Workers Compensation
COVID-19 Comp Expansions Could Have Significant Impact on Industry

CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/15/2020)

Litigation
Legal Experts Prepare for Battles Over Business Interruption Cover
Travelers Sued Over Coronavirus Coverage
Meal Delivery Services Sued Over Restaurant Prices Amid Pandemic
Pandemic Relief
Swiss Re Donates CHF 5 Million to Support COVID-19 Relief Efforts
Axis Capital, Swiss Re Pledge Donations to Pandemic Relief
Australia’s QBE to Raise $825 Million to Counter Coronavirus Crisis
CA Workers Comp Fund Creates Virus Relief Programs for Policyholders
Coronavirus Litigation Against Nursing Homes Takes Off in Tennessee
Regulation and Legislation
AL Regulator Eases Process for Auto Insurers to Reduce Policyholder Premiums
CA Insurers Ordered to Give Refunds
Politicians Push Insurers to Resolve Mounting Disputes Over COVID-19 Losses

Related:
Risk Manager is Suddenly a Hot Job
How Homeowners Insurance Claims Have Changed During the Pandemic

Coronavirus Wrap-up: Property and Casualty (4/9/2020)

Estate of Illinois Worker Who Died From COVID-19 Sues Walmart
Pricing Impact of COVID-19 Likely ‘Dramatic’: MarketScout
Federal and State OSHAs Overrun With COVID-19 Complaints
Insurance Companies Offering Relief During Pandemic
Options for Those Struggling to Pay Their Auto Insurance Premiums During Pandemic
Addressing Challenges of COVID-19: From Underwriting to Claims
Rise in Searches for ‘How to Set Fire’: A Sign Insurance Fraud Beckons as Economy Crashes?
Zoom Sued for Not Disclosing Privacy, Security Flaws
Sailors Cleaning Coronavirus-Stricken Carrier Lack Protective Gear
Colorado’s Marijuana Businesses Can Remain Open During Pandemic but Say They’re Still Struggling
Practical Business and Insurance Considerations for Hotels, Restaurants During COVID-19 Crisis
Is It Safe To Travel Anywhere? Your Coronavirus Questions Answered
SBA Overwhelmed with Demand. Is it Up to the Task of Responding to Coronavirus?
Driving Less During Coronavirus Outbreak? You Could Get an Auto Insurance Discount
Progressive, Travelers, USAA Latest to Offer Discounts, Other Accommodations
Insurance Industry Charitable Foundation COVID-19 Crisis: IICF Children’s Relief Fund
Museums Hope Thieves Stay Home Too
A.M. Best: Event Cancellation Insurers May Exclude Future Pandemics
U.S., Britain Warn That Hackers Increasingly Use Coronavirus Bait

Florida’s AOB Crisis:
A Social-Inflation Microcosm

Never heard of “social inflation”? It’s a fancy term to describe rising litigation costs and their impact on insurers’ claim payouts, loss ratios, and, ultimately, how much policyholders pay for coverage.

The number of auto glass AOB lawsuits statewide in 2013 was over 3,800; by 2017, that number had grown to more than 20,000.

While there’s no universally agreed-upon definition, frequently mentioned aspects of social inflation are growing awards from sympathetic juries and a trend called “litigation funding”, in which investors pay plaintiffs to sue large companies – often insurers – in return for a share in the settlement.

Less discussed are state initiatives that inadvertently invite costly abuse. Florida’s assignment of benefits crisis is an excellent example.

Assignment of benefits (AOB) is a standard insurance practice and an efficient, customer-friendly way to settle claims. As a convenience, a policyholder lets a third party – say, an auto glass repair company – directly bill the insurer.

Easy.

In Florida, however, legislative wrinkles have spawned a crisis.

The state’s “David and Goliath” law was meant to level the playing field between policyholders and economically powerful insurers. It lets plaintiffs’ attorneys collect fees from the insurer if they win their case – but not vice versa. If the insurer wins, the plaintiff owes the insurer nothing.  This creates an incentive for attorneys to file thousands of AOB-related suits because there is no limit on the fees they can collect and no risk. Legal fees can dwarf actual damages paid to the policyholder – sometimes tens of thousands of dollars for a single low-damage claim.

AOBs are an efficient, customer-friendly way to settle claims…. In Florida, however, legislative wrinkles have spawned a crisis.

This type of arrangement is unique to Florida. And, despite efforts to contain it through reforms to the state’s personal injury protection (PIP) program, the abuse has spread beyond its origins in the southern part of the state and to other lines than personal auto and homeowner’s insurance. More than 153,000 AOB suits were filed in Florida in 2018 – a 94% increase from about 1,300 five years earlier.

Contributing to the crisis is the ease with which unscrupulous contractors can “find” damage unrelated to an insured incident or overbill for work done and file a claim. Florida statutes let policyholders assign benefits to a third party without insurer consent – which limits the insurer’s ability to monitor a claim to make sure costs aren’t inflated.

A measure signed into law by Gov. Ron DeSantis earlier this year aimed to curb AOB litigation by putting new requirements on contractors and letting insurers offer policies with limited AOB rights, or none at all.  However, it excludes auto glass repairs. The number of auto glass AOB lawsuits statewide in 2013 was over 3,800; by 2017, that number had grown to more than 20,000.

Florida’s experience provides an ongoing study into how hard it can be to stuff the social inflation genie back into its bottle.

For more details, see I.I.I.’s white paper, “Florida’s Assignment of Benefits Crisis: Runaway Litigation Is Spreading, and Consumers are Paying the Price”.

How underwriters can prepare for child sexual abuse claims

Seventeen states and Washington, D.C. have laws taking effect in 2019 that either abolish or extend statutes of limitations for victims of child sexual abuse to sue or seek criminal charges against their abusers. A recent A.M. Best report compares child sexual-abuse claims to asbestos liability because the claims can affect decades-old insurance policies and the settlement amounts can be hard to predict.

In a recent blog post, Carey Quigley, a Gen Re treaty account underwriter, discusses what the new laws mean for underwriters that handle commercial “child custodial care” risks. These risks encompass schools, churches, sports, camps, day care and any other organized activities involving minors.

Quigley notes that unless their policies were written on a claims-made basis, the liability of these organizations for the past conduct of employees and volunteers does not typically affect their exposure under current insurance policies. Nevertheless, he recommends that underwriters take the following three steps in reviewing guidelines and policy forms:

Build a hazard scale: The degree of risk increases with the length of the activity, so a boarding school would be on the far end of the spectrum. Since parents are now more involved with their children’s activities, local groups and gatherings would present a lower risk.

Review insurance forms: Most general commercial writers may have a local dance school or a small church in their portfolio. For these types of policyholders insurers have developed Sexual Abuse and Molestation (SAM) endorsements offering critical but not unlimited protection.

Quigley recommends that insurers include language in their SAM endorsement to: Move all coverage into the policy when the abuse first began; treat all abuse by a single perpetrator as a single claim; treat all related or interrelated abuse as a single claim, without further qualification; and provide coverage on a claims-made basis.

Decide exclusions and check wording: When writing exclusions it’s important to determine whether they will extend to all types of physical abuse, or only sexual abuse. Often these terms are defined to prevent overlap with the GL policy and stacked limits from the endorsement and base policy. If a lawsuit alleges sexual abuse with false imprisonment or battery for instance, the insurer probably intends that all such allegations trigger only the SAM endorsement.

In conclusion Quigley says that underwriters should monitor court decisions to learn how policy language is interpreted by courts and check forms filed by other insurers to see how they address stacking issues.

I.I.I. Report: Patchwork of state marijuana laws causing headaches for employers, insurers

Today Illinois Governor J. B. Pritzker is reportedly going to sign into law a bill that legalizes recreational marijuana in the state. That makes Illinois the eleventh state (plus D.C.) to legalize marijuana for adult use.

Click to enlarge.

But as medical and recreational marijuana legalization spreads, concerns about what this means for workplace safety and workers compensation continue to grow. What is the impact of legal marijuana on workplace safety, employer duties and obligations and workers compensation insurance?

Today, the I.I.I. published a report that examines the current state of the issue. (Download the report here.)

Haze of confusion: How employers and insurers are affected by a patchwork of state marijuana laws” dives into the following questions:

  • How does marijuana intoxication work and how might it impact workplace safety?
  • What accommodations, if any, are employers expected to provide for workers that use marijuana?
  • Does workers compensation insurance provide benefits to injured employees testing positive for marijuana? What about reimbursement to injured workers for medical marijuana?

Unfortunately, none of these questions have straightforward answers. Every state’s laws and regulations governing these issues are different, not to mention that federal law prohibits marijuana outright. To complicate matters further, state laws and regulations are constantly changing. Employment and insurance activities once prohibited are often now permitted – or required.

Click to enlarge.

Legal marijuana isn’t going away. Employers and insurers will continue to grapple with a rapidly changing environment, perhaps for years to come.

To learn more, download the report here.