Insurance law generally imposes on a policyholder the duty to give timely notice of claims to its insurance company. Sometimes, because of forgetfulness, ignorance, neglect, or a number of other reasons, companies fail to immediately give notice of loss and potential losses to insurers. In those circumstances, insurers often raise the defense of “late notice.” As a result, a number of courts have devised a “notice prejudice rule” which limits the use of the late notice defense to situations when the delayed notice actually caused prejudice to the insurer. In St. Paul Mercury Insurance Company v. American Bank Holdings, Inc., the Fourth Circuit, applying Maryland law, addressed the question of what qualifies as “prejudice.” In that case, American Bank Holdings, Inc., did not provide notice to its insurer until after a $98.5 million default judgment had been entered against it in the underlying claim. St. Paul raised the defense of late notice, … [Read more...] about Late Notice to Insurer Costs Maryland Bank Millions
Consulting insurance costs
Many insurance professionals believe the next hard market may be lurking right around the corner. Is your self-insurance program ready?Many insurance professionals believe the next hard market may be lurking right around the corner. Historically in hard markets, self-insurance has been used as a risk financing mechanism to offset higher insurance prices and the lack of capacity. But just as a diligent driver would be sure to have a mechanic perform a full tune-up before embarking on a long car trip, a risk manager also needs to periodically conduct a systematic check of insurance exposures in order to maximize the performance of a self-insured program and determine if there are any issues hidden below the surface. The following key questions can guide your assessment.Is Self-Insurance a Viable Option?Self-insurance and large-deductible programs are usually mentioned at the top of the list of ways to control insurance costs in a hard market. A risk manager needs to first determine which … [Read more...] about Does Your Self-Insured Program Need a Tune-Up?
Jurist and law professor Richard Posner recently commented on a common problem among lawyers, namely, that they believe they have a “math block.” Jackson v. Pollion, 733 F.3d 786, 788 (7th Cir. 2013). More recently, Judge and Mediator Wayne D. Brazil noted that even sophisticated risk analysts “cannot reliably determine the ‘discounted settlement value’ of a case” because of their misunderstanding of how to apply mathematical principles to real-world decision making. In fact, if you are a lawyer, you have likely heard other lawyers make jokes about how if they could do math, they would not have gone to law school, but rather business or medical school. You may have even made these jokes yourself.Posner, however, believes that lawyers’ basic discomfort around math is a serious matter, and one that disadvantages clients. He points to the need for lawyers in litigation related to emerging science or … [Read more...] about Insurance by Number – Metrics in Litigation
A critical coverage issue under “claims made” liability insurance policies—which typically cover only claims made against a policyholder and noticed to an insurance carrier during the applicable policy period (or shortly thereafter)—is determining when a matter becomes a “claim” and when that claim was first “made.” While these may sound like straightforward determinations, they can be contentious in certain contexts. One such context is qui tam actions. Policyholders who face possible qui tam liability should be aware that the unique procedural rules applied to qui tam actions are leading to a growing number of coverage disputes between qui tam defendants and their insurers.In a qui tam action, an individual (known as a “relator”) brings suit under § 3730(b) of the False Claims Act on behalf of the government concerning a government contract. The relator’s complaint must be filed under seal … [Read more...] about Is a Sealed Lawsuit a “Claim”? Insurance Coverage Issues for Qui Tam Actions
Each year since its creation in 2011, the Consumer Financial Protection Bureau (“CFPB”) has steadily increased the number of investigations and enforcement actions commenced against financial companies. These investigations and enforcement actions can be costly; the defense costs associated with these actions alone can quickly escalate into the millions of dollars.Further, any settlement with the CFPB has the potential to cripple a financial company’s ability to operate. To date the CFPB has required financial companies to pay in excess of $4.6 billion in relief to consumers and $150 million in civil penalties. And there is no light at the end of the tunnel – the CFPB is well funded, well staffed, and its budget is continually increasing. Thus, it is expected that the CFPB will only increase the number of investigations and enforcement actions it pursues.As a result of the increasing assertiveness of the CFPB, financial institutions are seeking to transfer or … [Read more...] about Defray the Costs of CFPB Actions by Utilizing your Insurance Portfolio