Spurred by the prescient reporting found in this space (and, just maybe, by the Anthem data breach, which occurred a week later), insurance regulators have recently engaged in a flurry of regulatory activity relating to cyber security issues. Very shortly after the Anthem breach was announced, the newly-formed Cybersecurity (EX) Task Force of the National Association of Insurance Commissioners (NAIC) called for a multi-state examination of Anthem's cybersecurity ... Keep Reading »
Class Action
California Bans Use of Price Optimization
Yesterday California Insurance Commissioner Dave Jones became the latest voice in a growing chorus of state insurance regulators who condemn the use of "Price Optimization" as a mechanism for adjusting property-casualty insurance rates and pricing. In a Notice delivered to more than 750 P&C insurers, the Commissioner declared that "any use of Price Optimization in the ratemaking/pricing process or in a rating plan is unfairly discriminatory in violation of ... Keep Reading »
Cyber Risk as a Regulatory Issue: A Connecticut Regulator Shares Her Insights
Even at Sony, cyber security was a hot topic before Kim Jong-un took an interest in Seth Rogen’s oeuvre. In 2011, hackers gained access to the personal and financial information Sony had collected on more than 100 million participants in its on-line gaming networks. The incident was the subject of more than 60 class actions, for which Sony announced a settlement last summer. Sony’s plight illustrates one facet of the interrelationship between cyber risk and ... Keep Reading »
Apartment Complexity: Appellate Court Sorts Out Multiple Coverage Claims for Construction of Uninhabitable Residence
In QBE Ins. Corp. v. Adjo Contracting Corp. (N.Y. App. Div. 2d Dep't Oct. 29, 2014), an intermediate appellate court in New York confronted cross-appeals involving 15 different insurers embroiled in multiple lawsuits, including consolidated class actions. The core issue of the case was whether the insurers for a variety of subcontractors were obligated to provide a defense to tenants' lawsuits against the developer and general contractor of a doomed residential ... Keep Reading »
With Sewers Backing Up, Messy Damage Claims are On the Rise
Andy crawled to freedom through five hundred yards of - - - smelling foulness I can't even imagine. Or maybe I just don't want to. Five hundred yards. The length of five football fields. Just shy of half a mile. –The Shawshank Redemption (1994) Many homeowners and other property insurance policies contain an exclusion to address one of the by-products of the increased frequency of severe weather: it bars coverage for property damage caused by "water which backs up ... Keep Reading »
Claims Handlers: It’s Time to Adjust Our Claims!
Many insurers have a longstanding practice of paying claims adjusters a set weekly salary, regardless of the number of hours they actually work. The practice has support in federal labor regulations; the regulations expressly exempt claims adjusters from the overtime requirements of the Fair Labor Standards Act (FLSA), if their duties include discretionary and administrative activities such as interviewing witnesses, inspecting property damage, reviewing information for ... Keep Reading »
If a Tree Falls on the Internet … An Insurer Has a Duty to Defend
Legal bloggers sometimes ask themselves: If my post appears on the Internet, but there’s no evidence anyone has read it, have I been published? The question has not yet been finally resolved among law firm compensation committees, but, in the data privacy context, a federal court in Virginia recently offered an emphatic "yes." In Travelers Indemnity Company of America v. Portal Healthcare Solutions, LLC, No. 1:13-cv-917(GBL) (E.D. Va. Aug. 7, 2014), the court found ... Keep Reading »
All in Good Time: Another Court Refuses to Allow Plaintiff to Force an Early Resolution of Insurer’s Rights Under a Liability Policy
Like insurance companies, plaintiffs’ class action attorneys do better when they know how to manage risk. Bringing a case to trial can involve an enormous investment of time and resources, and most firms can’t afford to do it if there’s a significant chance the defendant will not be entitled to liability coverage at the end of the day. For that reason, avoiding an early resolution of coverage issues can sometimes help an insurer negotiate a more favorable settlement. ... Keep Reading »
SCOTUS: Would-Be Class Representative Cannot Avoid CAFA Jurisdiction by Stipulating to Limit Damages
Some class action plaintiffs who want to keep their cases in state court execute “stipulations” not to seek more than $5 million in aggregated damages on behalf of the class. When the case is removed, they argue that the defendant cannot establish that “the matter in controversy exceeds the sum or value of $5,000,000”—the threshold for federal jurisdiction under the Class Action Fairness Act. In a curt, unanimous opinion authored by Justice Breyer, the Supreme Court of ... Keep Reading »
Oregon Supreme Court Addresses Attorneys’ Fees for Appellate Proceedings in Class Action Over Automated Review of Medical Bills
Strawn v. Farmers Insurance Co. of Oregon is a class action that challenged the insurer’s use of automated bill review systems to determine the reasonableness of medical claims submitted under the Personal Injury Protection (PIP) coverage of automobile policies. The plaintiff alleged that Farmers had promised to pay the “reasonable” cost of covered medical services, but had failed to do so. In May 2011, the Supreme Court of the State of Oregon ruled that a class could ... Keep Reading »