Tag Archives: Insurance

Texas Legislature Votes to Restrict Policyholders’ Rights

Texas lawmakers are now on the fast track to restrict policyholders’ rights when their insurance companies fail to pay property insurance claims arising out of weather events, such as storms involving heavy winds and hail. Now that the Texas Senate has approved House Bill 1774, Governor Abbott is almost sure to sign it.  Unfortunately, this … Continue Reading

The Expanded French Class Action System May Impact Liability and Insurance Coverage For Corporations Domiciled and Doing Business in France

Although the French class action system has gotten off to a slow start with only 6 actions initiated to date, the recently and anticipated expanded scope of the French class action system will impact the potential liability and insurance coverage of corporations domiciled and doing business in France. To learn more about the implications of … Continue Reading

Companies can insure against cyber ransom

National Public Radio and other news outlets are reporting that a Los Angeles-area hospital recently paid a $17,000 ransom (in the form of 40 bitcoins) to hackers to unencrypt its computer networks, which had been held hostage after “ransomware” was introduced into the hospital’s network. Ransomware is a form of malicious software, or “malware,” that encrypts … Continue Reading

United States Department of Justice Announces “Best Practices” for Addressing Cyber Attacks

In light of the growing concern over cybersecurity, the United Stated Department of Justice (“DOJ”) issued guidance last week on how to prepare for and respond to cyber attacks.  Taking lessons learned by federal prosecutors while handling cyber investigations, and input from private sector companies that have managed cyber incidents, the guidance contains a step-by-step guide … Continue Reading

Proving Your Business Income Loss: Defeating Insurance Company Challenges to Policyholder Evidence

Courts commonly observe that the purpose of Business Interruption or Business Income insurance is to put the policyholder in the same position it would have been in had there been no interruption. The Business Interruption inquiry is, thus, counterfactual. As such, for Business Interruption claims that go to trial, insurance companies and policyholders alike usually … Continue Reading

New York Department of Financial Services Announces New Cyber Security Measures Directed at Strengthening Insurers’ Cyber Defenses

The New York Department of Financial Services (NYDFS) announced last week a series of measures it plans to take "to help strengthen cyber hacking defenses at insurers." Those measures include, among other things: regular, targeted assessments of cyber security preparedness at insurance companies; putting forward enhanced regulations requiring institutions to meet heightened standards for cyber security; and considering the ways in which NYDFS can support and encourage the development of the cyber security insurance market. The NYDFS stated that it plans to initiate these measures in the coming weeks and months.… Continue Reading

Pursuing Insurance Coverage for Alleged Mislabeling of Dietary and Herbal Supplement Products

Businesses in the dietary supplement supply chain are taking cover after the New York Attorney General (NYAG) ordered four major retailers to cease and desist the sale and alleged mislabeling of certain herbal supplements. After genetically testing store-brand product samples of Ginko Biloba, St. John's Wort, Ginseng, Garlic, Echinacea, and Saw Palmetto, the NYAG alleged that the supplements were unrecognizable or contained substances other than those disclosed on their packaging labels. Class action lawsuits already have been filed, and the NYAG directed the targeted retailers to provide it with detailed information regarding the manufacturing, testing, and procurement of the herbal supplements, and announced that it may bring charges for alleged deceptive practices in advertising.… Continue Reading

Top Ten Things to Know about Representations and Warranties Insurance

1. Representations and Warranties insurance has quickly risen to become a standard topic of discussion in many merger and acquisitions transaction negotiations. 2. Representations and Warranties Insurance is not a new product - but until recently its use has been limited because of prohibitive premium pricing and buyer concerns as to whether insurers would actually pay on claims. The insurance market is working to bring prices down and establish a payment history.… Continue Reading

President Obama Acknowledges Growing Cybersecurity Threats to the Government and Economy, Proposes New Measures to Fight Cyber Risks

Just days after news broke that ISIS hackers forced the shutdown of the U.S. Central Command's Twitter account, President Obama met with congressional leadership, members of the Federal Trade Commission and the Department of Homeland Security to unveil a proposal to facilitate increased cooperation between the private sector and government to combat growing cybersecurity threats. Citing concerns with preserving national security, public safety and public health, the President proposed new federal cybersecurity legislation, emphasizing that although our digital economy "creates enormous opportunities," it also "creates enormous vulnerabilities for us as a nation" that are growing and costing us billions of dollars. In remarks on Tuesday at the National Cybersecurity Communications Integration Center, the President further acknowledged the serious legal and liability issues involved with private companies sharing information with the government, and argued that his proposed legislation "includes essential safeguards to ensure that [the] government protects privacy and civil liberties" and other liability protections for companies that share information on cyber threats.… Continue Reading

Lessons Learned: Report All Potential D&O Liability Insurance Claims Without Delay

The District Court of Massachusetts' January 6, 2015 opinion in Biochemics, Inc. v. Axis Reinsurance Co., 2015 WL 71493 (D. Mass. Jan. 6, 2015), reaffirms the importance of providing timely notice of all D&O liability claims - including subpoenas. In Biochemics, the policyholder sought coverage from its primary D&O liability insurer, Axis, for defense costs it incurred in an SEC enforcement action commenced during the AXIS policy period. Judge Rya Zobel held that Biochemics had no coverage for the SEC enforcement action because it related back to two deposition subpoenas that the SEC served on Biochemics before the AXIS policy incepted. Because those deposition subpoenas indicated on their face that the SEC had commenced a formal investigation against Biochemics, each subpoena was a "Claim" that should have been reported to Biochemics' prior D&O carrier. Because the Claim was "first made" before the AXIS policy period, Judge Zobel granted AXIS' motion for summary judgment and found that AXIS owed Biochemics no coverage under its policy.… Continue Reading

Reed Smith’s Insurance Recovery Group Ready to Help Policyholders after U.S. Congress Fails to Extend TRIA

Last week, the U.S. Congress adjourned for the year without making any provision for extending the federal Terrorism Risk Insurance Act ("TRIA"). Absent some sort of extension, TRIA thus will expire next week - on December 31, 2014. As a result, insurers will no longer be required to offer terrorism insurance, and even those insurers that do offer the coverage may well reassess their risk and price the coverage at substantially increased premium rates.… Continue Reading

Potentially Fraudulent Insurance Company Practices Are Exposed In Superstorm Sandy Litigation

We recently marked the two year anniversary of Superstorm Sandy. With that anniversary came an influx of litigation in response to insurance companies denying or overly limiting coverage. That litigation recently revealed highly questionable practices within the industry.… Continue Reading

Deputy Secretary of Treasury Encourages Financial Institutions

Top-ranking U.S. officials continue to stress the importance of securing adequate protection in the event of cyberliability losses. Most recently, those efforts have been directed to financial institutions, an industry particularly susceptible to cyber attacks. On December 3, 2014, United States Deputy Secretary of the Treasury, Sarah Raskin, delivered a speech at the Texas Bankers' Association Executive Leadership Cybersecurity Conference wherein she provided banks with a simple checklist to consider before a cyber attack occurs. Notably, one item on the Deputy Secretary's checklist was cyberliability insurance - coverage at which the Deputy Secretary recommended all banks take a hard look.… Continue Reading

As Federal and State Agencies Warn of Increased Cyber Threats, Insurance Incentives for Compliance with NIST Cybersecurity Framework May Be on the Horizon

Since the President's February 2013 Executive Order directing the National Institute of Standards and Technology (NIST) to lead the development of a voluntary framework to address and reduce cyber risks, the agencies and stakeholders involved have been exploring whether to tie the February 2014 Framework for Improving Critical Infrastructure Cybersecurity (the NIST Framework) to incentives such as cyberliability insurance. For example, in a Report to the President on Cybersecurity Incentives, the Treasury Department suggested that "[c]yber insurance can promote adoption of stronger security measures" because, among other reasons, "insurers could require policyholders to comply with minimum security standards as a condition of insurance coverage, including adoption of the Framework." The Treasury Department held a public meeting on November 6 that included a discussion of developments in the market for cyberliability insurance and the NIST Framework.… Continue Reading

Catch Me If You Can: Fake Doctor’s Application Voids Coverage For Himself But Not For Innocent Co-Insureds

In life, sometimes even the law imitates art. As if copied straight out of the script of "Catch Me If You Can," the U.S. District Court in South Carolina issued a ruling on October 21, 2014 in which it held that despite a false application for professional liability insurance submitted by an applicant pretending to be a doctor, the insurance afforded to the company and other doctors and nurses identified as named insureds under the policy remained in force and was not void ab initio as to the innocent co-insureds.… Continue Reading

Beware Of Gaps In Your Cyber Risk Policy – Are You Covered In the Event of an Insider Attack or Data Breach?

The evolving market for cyberliability insurance coverage reveals significant differences in the scope of coverage afforded under available policies. A coverage gap that may exist under some policies is for insider cyber attacks. While external attacks receive substantial news coverage, a recent study finds that businesses may be far less equipped to stave off attacks involving insiders: employees, vendors, suppliers and others who may have authorized access to critical or sensitive data.… Continue Reading

Perception versus Reality: ACE Adds an Ebola Exclusion Just in Case

The insurance industry reacts not only to real losses, but it reacts with equal concern to perceived risks, particularly where those perceived risks could, at least in theory, amount to significant financial loss for policyholders and/or insurers. The Ebola "crisis" is the latest example of the insurance market reacting to a perceived risk that may never amount to an actual insurable loss.… Continue Reading

All Businesses Should Review Insurance Coverage in Face of Ebola Crisis

Every day, there is a new story about Ebola in the media. While some commentators suggest that the threat of Ebola in the United States is overblown - and we hope they are right - now is still the time for all businesses to review their insurance policies to understand what insurance coverage, if any, they may have available should an Ebola-related liability and/or loss occur.… Continue Reading

Coverage For Construction Defects

By Paul Walker-Bright A hypothetical: The roof of a parking garage that is part of a condominium development partially collapses, destroying landscaping over the collapsed section of the roof and the floors underneath the collapsed section. The roof had been fully installed and the parking garage was being used at the time of the collapse, but … Continue Reading

Answers To The Most Common And Perplexing Questions About Professional Liability Coverage

Reed Smith partner Tom Marrinson, resident in the firm’s Chicago office, has been advising policyholders about their insurance coverage, and representing them in coverage litigation, for more than 20 years. While Tom’s experience ranges widely, he has literally written the book on insurance coverage for professionals and companies that employ them Professional Liability Insurance, published … Continue Reading

Pushing Back on Insurance Coverage Denials for Sexual Abuse Claims

It has become routine in the past ten years or so for liability insurance companies to deny insurance coverage for sexual abuse claims, often on the theory that sexual abuse is intentional in nature. Many liability insurance policies commonly adopt the definition of “occurrence” which requires that a claim must arise from an “accident.” Under these policies, … Continue Reading

Predictable Responses to Benmosche Leak

This morning’s WSJ report that Robert Benmosche, recently appointed CEO of AIG, is unhappy with government pay restrictions, has elicited predictable, less than sympathetic responses. “Tiny Violins” is the headline from the Daily Beast.  New York Magazine’s Daily Intel responded with sarcasm: Apparently, someone told Robert Benmosche that running the world’s largest and most [expletive withheld] insurer … Continue Reading
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