Emerging Issues Archives - Page 7 of 18 - The Insurance & Reinsurance Report

August 17, 2014 Emerging Issues

Motor Carrier Act Does Not Expand Policy Definitions Where Coverage Exceeds Statutory Minimums, Sixth Circuit Says

On August 5, the Sixth Circuit Court of Appeals reversed and remanded a lower court ruling granting an insurer a Rule 12(c) dismissal in a declaratory judgment action based on the district court’s premature determination of what constituted an “employee” under the policy at issue.

The Estate of Donald Underwood sued Expeditor’s Express, a trucking company for whom Underwood was driving, after Underwood’s truck veered off the road, burst into flames, and killed him. Expeditor asked its insurer, Gramercy Insurance Company, to defend the lawsuit …

August 16, 2014 Emerging Issues

Another Victory for Insurers in Litigating the Scope of Coverage B: District Court Rejects Duty to Defend Against Alleged Violations of Data Privacy Laws

In National Union Fire Insurance Company of Pittsburgh, PA v. Coinstar, Inc. (W.D. Wash., No. C13-1014-JCC, Aug. 7, 2014), the U.S. District Court for the Western District of Washington ruled that National Union Fire Insurance Company of Pittsburgh, PA had no duty to defend Redbox Automated Retail, LLC (Redbox), a Coinstar, Inc. subsidiary, in two separate class action suits alleging that Redbox violated its customers’ privacy. Notably, the first class action suit, Cain v. Redbox, alleged that Redbox violated Michigan’s Video Rental Privacy Act …

August 8, 2014 Emerging Issues

Standing On Its Own: CT Supreme Court Expands Insurers’ Ability to Sue Another Insurer

In Travelers Casualty & Surety Co. of America v. The Netherlands Insurance Co., 2014 Conn. LEXIS 262, 312 Conn. 714 (Aug. 5, 2014), the Connecticut Supreme Court broadened an insurance company’s ability to sue another insurance company pursuant to the state’s declaratory judgment statute.

The coverage dispute arose as follows. Lombardo Brothers Mason Contractors was hired by the state of Connecticut to perform masonry for the construction of the law library for the University of Connecticut School of Law. The masonry work was performed …

August 6, 2014 Emerging Issues

Tenth Circuit Limits Policyholder Recovery for Defective Work and Rejects Windfall Award

This coverage dispute arose from a claim to recover the policyholder’s cost of repairing a site dewatering system. Glacier Construction Company (Glacier) had contracted with a municipal body to build a new wastewater pumping facility. Glacier purchased a builder’s risk insurance policy from Travelers Property Casualty (Travelers), which included coverage for “Builder’s Risk Site Preparation.”

That provision stated, in pertinent part, as follows: “If … You incur expenses to reexcavate the site, reprepare the site, regrade the land, or reperform similar work because of loss …

August 4, 2014 Emerging Issues

(Re)Stating the Obvious: 8th Circuit Looks to Policy’s New York Amendatory Endorsements to Resolve Choice of Law Dispute

In George K. Baum & Co. v. Twin City Fire Insurance Co., 2014 U.S. App. LEXIS 14368 (8th Cir. July 25, 2014), the United States Court of Appeals for the Eighth Circuit addressed the choice-of-law issue with respect to a Twin City Fire Insurance Co. (Twin City) policy, which did not contain a choice-of-law provision. Disagreeing with the lower court’s conclusion that Missouri law governed the policy, the court ruled that New York law applied.

As background, George K. Baum & Company (Baum) underwrote …

July 31, 2014 Emerging Issues

Courts Split on ACA Health Insurance Subsidies: Highlights Differences in Statutory Interpretation

On July 22, 2014, two U.S. Courts of Appeals highlighted both the science and the art of statutory construction and interpretation — and came to very different conclusions. These courts were asked to consider an IRS rule (26 C.F.R. § 1.36B-2(a)(1)) associated with a section of the Affordable Care Act that provides tax credits (subsidies) for those who purchase health insurance under the exchanges. The central issue was whether the relevant provision of the ACA (26 U.S.C. 36B(c)(2)(A)(i)) (the provision), which provides that subsidies would …

July 31, 2014 Emerging Issues

ACE Must Defend Additional Insured In Eight Underlying Natural Gas Explosion Cases

Lexington Insurance commenced action against ACE American regarding whether ACE had a duty to defend Midcontinent Express Pipeline, LLC and its affiliates (MEP) in eight underlying lawsuits arising out of a natural gas explosion. Lexington sought a declaration that (1) MEP Parties are additional insureds under the ACE Policy, (2) the MEP Parties, as additional insureds under the ACE policy, are entitled to a defense of underlying lawsuits; and (3) ACE is liable to Lexington for the costs and expenses incurred defending the MEP Parties …

July 29, 2014 Emerging Issues

Eight Million is More Than Enough: Sixth Circuit Orders Excess Insurer to Drop Down and Pay Insured’s Defense Costs

The United States Court of Appeals for the Sixth Circuit recently handed an $8 million defense bill to an excess insurer when the primary carrier denied coverage for an underlying liability claim and settled its liability claim for a mere fraction of the defense costs. IMG Worldwide, Inc. v. Westchester Fire Ins. Co., Nos. 13-3832, 13-3837, 2014 U.S. App. LEXIS 13703 (6th Cir. July 15, 2014).

The coverage dispute arose out of the following circumstances. The primary carrier, Great Divide Insurance Company, issued a …

July 25, 2014 Emerging Issues

NAIC Launches “Protecting the Future” to Highlight the Benefits of State-based Insurance Regulation and Issues RFP for Outside Consultant

On July 16, 2014, the National Association of Insurance Commissioners (NAIC) announced it was launching an educational initiative called “Protecting the Future” to educate the public and other insurance supervisory bodies on the benefits of the U.S. state-based system of insurance regulation. This program is being “deployed in Washington, D.C.; Brussels, the capital of the European Union; and in Basel, Switzerland, the seat of the Financial Stability Board (FSB) for the G-20.”

The announcement notes that “[o]f the 50 largest insurance markets in the world, …

July 24, 2014 Emerging Issues

Fifth Circuit Rejects Argument That Total Pollution Exclusion Creates Illusory Coverage

The Fifth Circuit affirmed the district court’s grant of summary judgment in favor of Liberty Mutual, finding that Liberty Mutual had no duty to defend or indemnify Linn Energy in connection with the underlying lawsuit, which alleged leakage of saltwater, brine and other contaminants from Linn Energy’s pipeline onto the complainants’ properties. Notably, the Liberty Mutual policy issued to Linn Energy contained an Underground Resources and Equipment Coverage endorsement, which included in the definition of “property damage” damage to particular types of underground resources. Nonetheless, …