Key Takeaways-Coverage College 2022

Following are some key takeaways from this year’s program. Click “Show More” to read the takeaways of each session.

Environmental, Social and Governance (ESG) Developments and Trends

Speakers: Scott Casher, Jim Anelli, Rochelle Gumapac and Celestine Montague of White and Williams LLP; Peter Kelso, Principal/Leader of ESG Practice, Roux Associates, and Jeremy Moen, Senior VP, Executive Assurance and Healthcare Claims, Arch Insurance

While ESG began as a tool for identifying/measuring risks and opportunities, it has become a lever of value creation – companies must deliver financially and contribute socially.
When considering the “E” (Environmental) in ESG: companies need to focus on environmental trends, disclosures and planning management; insurers need to be prepared to address the unique challenges defining climate risks, including reporting requirements and financial concerns, and appreciate the scale and timing of climate change.
In considering some of the “S” (Societal) factors, as a result of the many reasons for increase in pay equality litigation, companies that fail to conduct pay equity audits do so at their own risk; the business case for diversity equity and inclusion (DEI) as an indicator of a company’s future success reflects growing diverse/consumer population/trends, social unrest/civil movements, anticipated government intervention as to reporting and disclosure.
When examining the “G” (Governance) in ESG – consider whether the organization is integrating the E and S goals into its Corporate Board Structure and Composition, operations and day-to-day decision making. For example, in addition to developing sound ESG policies, is the organization tying executive compensation to its ESG goals?
Corporate Boards should have the right mix of skills to direct the company, but, as part of that review, consider the organization’s Board and Senior Management diversity efforts; i.e., whether there has been real effort to include in that mix members from historically underrepresented groups in the Board and senior management.
Public representations of ESG policies are under scrutiny and may be challenged as being false and misleading. Before an organization makes public representations regarding its ESG policies, it should ensure that its statements are backed by evidence, in harmony with its actual practices and that there is nothing else about the organization that contradicts the statement or makes it incomplete. The focus of scrutiny is likely to include the company’s board and senior management and how the company is spending its time and money within and outside of its business operations.
It is important to accept that there will be tangible real consequences for failing to address ESG concerns early and implementing ESG policies publicly.

Demystifying Class Action Lawsuits: Fear No More

Speakers: Barbara S. Carra, Sara Mirsky and Christopher Quinlan, White and Williams LLP

Courts are split regarding whether to consider extrinsic evidence when evaluating an insurer’s duty to defend a class action. New York courts will not consider extrinsic evidence except in limited instances where the insured is trying to demonstrate coverage. California courts will generally consider extrinsic evidence introduced by the insurer or policyholder. The Supreme Court of Pennsylvania enforces a strict four corners doctrine that does not permit the consideration of extrinsic evidence, although recent trial court decisions suggest that exceptions to the rule may be gaining traction.
Whether an insurer is entitled to reimbursement of defense costs for uncovered claims will depend on whether the insurer can prove that certain costs are uncovered, the policy language, the reservation of rights letter, and the applicable state law. Insurers should consider intervening in the underlying action, filing a declaratory judgment action or negotiating directly with the insured. Insurers should also be aware of the state’s conflict rules, as certain ethical issues could arise when defending the insured in an underlying action involving uncovered claims.
Courts will often interpret liberally construe the facts of a complaint to find a duty to defend, which includes looking beyond the putative class members or broadly interpreting vague allegations.

Long Tail Exposure Insurance: An Update on Coverage Issues Concerning Asbestos/LTE/Environmental Claims

Speakers: Paul A. Briganti and Sara C. Tilitz, White and Williams LLP

Appellate courts in South Carolina and Wisconsin became the latest to hold that a “post-loss” assignment of rights under an occurrence-based liability insurance policy does not require the insurer’s consent.
A New York appellate court held that an insurer that had accepted service of process, defended and settled claims on behalf of its insured, a defunct manufacturer of asbestos-containing products, was not subject to direct claims by underlying plaintiffs because they did not hold judgments against the insured and the insurer was not the “real party in interest.” The insurer was not estopped by its claim handling from arguing for a pro-rata-by-time allocation of the settlements, including to uninsured periods.
Abatement costs related to lead paint claims have been held to constitute “damages” under insurance policies.
South Carolina has become a noteworthy asbestos jurisdiction in recent years, with numerous holdings that are unfavorable for insurers, including with respect to allocation, late notice, and the ability to sue insurers as alter egos of defunct asbestos suppliers and manufacturers.
Developments in the PFAS multi district litigation might indicate the possibility of no coverage for manufacturers of aqueous film forming foam (used by firefighters) on the basis of no occurrence or the fact that the manufacturers may have expected the damages at issue.
Microplastics and CCRs (coal combustion residuals, also known as coal ash) may be the subject of increased insurance claims in the future. Under recent federal regulations, unlined coal ash ponds must be retrofitted with liners or closed; it is possible that environmental contamination will be discovered during retrofitting/closing.

The Mixed/Multi-Purpose Doctrine and the Discoverability of Expert Opinions Memorialized in Claim Notes

Speakers: Chris Konzelmann and Anthony L. Miscioscia, White and Williams LLP

Before reducing something to writing and putting it into your claim file, consider whether that document might later be discoverable in some future litigation – perhaps between the insured and a claimant, or between your insurer and the insured.
When retaining an expert or consultant, consider having counsel do so to increase the likelihood that the expert’s findings and opinions are privileged or otherwise protected (unless, of course, you identify that expert as a testifying expert).
When copying or summarizing attorney-client communications in your claim file, make sure to indicate that the information is from an attorney or an attorney-client communication so that, if the claim file is later produced, appropriate privileges can be asserted.
If a document is not prepared exclusively for litigation and, instead, serves a dual purpose (such as part of claims investigation), that document might later be subject to production/disclosure unless a court concludes that the document was created because of anticipated litigation.

Winter Is Coming: Developments in Cryptocurrency and Mass Tort Bankruptcies

Speakers: James C. Vandermark and Frank J. Perch, III, White and Williams LLP

Watch the cryptocurrency space: Key decisions affecting the rights of cryptocurrency investors will be made in the coming weeks and months, both in bankruptcy courts and in regulatory and legislative forums.
Crypto presents insurers and reinsurers with difficult-to-assess risks, but also opportunities to enter an under-served market.
Insurers and reinsurers face a choice whether to seek out the market opportunities presented by crypto, or seek to wall themselves off from it.
Watch the mass tort bankruptcy space: The forthcoming Third Circuit decision in the J&J/LTL case has the potential to shape the future direction of mass tort litigation.

Two Distinctly American Epidemics: Similarities and Differences Between the Opioid and Vaping Crises Facing the Insurance Industry

Speakers: Michael O. Kassak and Adam M. Berardi, White and Williams LLP

Coverage litigation concerning opioid claims has focused on whether there has been an occurrence and whether the costs incurred by public entities in combating the opioid crisis constitute damages for bodily injury under a CGL policy.
While earlier decisions addressing these issues were split, recent rulings from the highest courts in Massachusetts and Ohio have sided with insurers on the bodily injury issue.
Because similar claims from public entities have been asserted with respect to vaping claims, the opioid decisions could have a significant impact on how courts decide these issues in the vaping context.
Vaping-related claims raise additional significant coverage issues, including whether addiction alone constitutes bodily injury.

To DJ or Not to DJ

Speakers: Lynndon K. Groff, Bernadette B. Silver and Robert F. Walsh, White and Williams LLP

A declaratory judgment action gives an insurer the ability to take preemptive action to obtain judicial resolution of an insurance coverage dispute.
Declaratory judgment actions are authorized in both federal and state courts. Insurers should consider the value of winning the “race to the courthouse.”
Some jurisdictions require insurers to bring declaratory judgment actions in certain situations, and some jurisdictions treat parties other than the insurer and insured—such as underlying claimants—as necessary parties.
Intervention can be used an alternative to a declaratory judgment action to help resolve disputed issues of fact that may affect coverage.

Everything ESI – Identification, Preservation and Best Practices

Speakers: Vincent N. Barbera and Farzana Islam, White and Williams LLP

Both before and as a result of the COVID-19 pandemic, there has been a monumental increase in the creation of electronically stored information (“ESI”).
ESI is often the primary focus of discovery, both between parties and from third parties.
Know your obligations to preserve, identify, gather and produce ESI.

CGL Policies and the Challenge of the Professional Services Exclusion

Speaker: Randy J. Maniloff, White and Williams LLP

Insurers have faced challenges enforcing Professional Services exclusions in CGL policies.
The solution may sound counter-intuitive: Do not use the word “professional” in the exclusion.