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Selected Articles
 The Hartford
Continues Their Encounters with ARI
Like the outcome in Where There’s
Smoke, There’s Coverage, The Story of
Insurance, Lawyers, and a Policyholder Freedom Fighter,
thanks to Hartford Fire Insurance Company, the entire industry has now lost
a claim handling technique along with a legal strategy which has
historically given insurers the upper hand in their claims handling
practices. Thanks to ARI and its capable counsel, insurers must
rethink their modus operandi of removing a state action to federal court,
losing a forum where the odds statistically favor the insurance
industry. As a result, until the Supreme Judicial Court of
Massachusetts rules otherwise, Massachusetts policyholders can, as a matter
of law, strategically split their declaratory judgment action from their
extra-contractual bad faith claim.
Now Hartford Fire Insurance Company finds itself back at
United States District Court where they’ll face having to produce responses
to ARI’s counsel’s discovery requests. We believe the complete
response to the discovery request, once produced, will reveal that
Hartford’s bad faith actions and omissions did violate Chapter 93A.
As such, ARI has a better than average chance of being awarded maximum
damages and attorney fees as prescribed by the statute.
We believe the outcome will only buttress what our
client-partners already know about ARI and what Hartford Fire Insurance
Company will soon discover. Insurance is the business of utmost good
faith. This case is yet another example of ARI’s commitment to make
sure insurers live up to their responsibilities.
Leveling the Playing
Field:
Structural
Analysis of Corporate Insurance Purchases
It may seem counterintuitive, but insurance is not
a service industry; rather, it is an industry of financial product
manufacturers. One can easily draw
an analogy that insurers are the industry’s “Manufacturers” and the agents
and brokers are “Intermediaries” or distribution channels for the
Manufacturers. A structural analysis of the corporate insurance
purchase reveals a common theme where the Insurance Buyer must
purchase insurance products with incomplete or biased information and with
insufficient time to make good decisions.
For instance, do you feel that the materials and information the Manufacturer
(insurer) or Intermediaries (agent/broker) provide are designed to make you
a savvy and well-informed insurance buyer?
Also, ask yourself, why can’t the agent/broker/insurer provide
renewal terms 30 days in advance (rather
than a couple days before expiration), given that your renewal occurs on
the same day every year? If
they truly represent your best interests, why then are they so
unenthusiastic about your decision to seek independent information and
counsel in navigating the system and leveling the playing field?
Where There’s
Smoke, There’s Coverage
The Story of
Insurance, Lawyers, and a Policyholder Freedom Fighter
These results, not unlike those we
achieve every day for our client-partners, have now become an issue not
just for this insurer, but for the entire Property & Casualty insurance
industry. The real enormity, as the
ARI decision points out, is not the judgment itself (Superior
Court decisions are not binding precedent), but
rather the drafting ambiguity in the ISO-based policy, the stark reality of
which will be unavoidable in every jurisdiction that it’s issued. Now just think, the next time fine particulate matter or “smoke”
(asbestos, lead paint dust, silica, Beijing dust storms, well you get the
point) damages your property, you won’t have to go down the long, arduous
path of bringing a suit against a negligent third party(s), but rather,
just fill out a Proof of Loss and simply ask your property insurer to
pay. If your insurer gives you their
usual blather, just point to the “smoke” ambiguity (“smoke” appears in the
Covered Cause of Loss as well as in the exclusionary Pollution definition)
in the ISO-based policy along with our Massachusetts Superior Court
decision and your jurisdiction’s consumer protection and/or punitive damage
statutes.
Is This What You
Envisioned When You Purchased the Policy?
In
the area of execution, it has been our experience that one of the greatest
risks a successful organization faces is relying on business partners who
lack common sense and the ability to ‘get it done’, who instead rely on
their brand, pedigree and capital (yours) for “success”. Unfortunately for
corporate insurance buyers, the insurance industry is not so good at
execution. Or is it? Is it a lack of execution ability that is the main issue, or rather is it the
strategic use of opacity and thinly-veiled conflicts of interest
which allows the industry to take advantage of the policyholder whenever it
sees fit? The following real-world,
policyholder – carrier interaction illustrates yet another reason to raise
the issue of conflicts in the insurance industry.
Reactions Magazine’s Rising Stars
We are pleased to announce that ARI’s
President, John Paul Sutrich, was identified by Reactions Magazine as a rising star and leader in the global
insurance services space. Reactions, the financial magazine
for the global insurance market, spent four months canvassing the globe in
an effort to identify the brightest talent around the world (page 21). While the majority of those selected
represent insurers and brokers, Mr. Sutrich was one of only two rising
stars from the consulting/advisory services space. We appreciate Reactions’ recognition of John Paul as an industry leader (page
31), particularly given the reality that ARI is not a broker or
(re)-insurer, but rather uniquely focused on providing unconflicted counsel
and strategic “risk adjusted” advice to corporate buyers in the global
insurance marketplace.
The Viability of
D&O Insurance in Foreign Jurisdictions:
The Korean
Experience
Are you an Officer or Director of an
overseas entity, even if it’s just a subsidiary of your parent
company? Has your parent company
indemnified the Directors, Officers and Managers of your foreign
subsidiaries? Even if so, do you
know how the laws of this foreign jurisdiction impact corporate
indemnification and the viability of coverage provided by your Directors’
and Officers’ (D&O) liability policy?
We offer this brief as a baseline for
the discussion of the issues surrounding corporate indemnification of
Korean Directors, Officers and Managers and the financing of that
indemnification vis-ŕ-vis insurance.
The “Korean Experience” should provide you with insights into how
the laws and norms of foreign jurisdictions may affect your coverage and
therefore your exposure, corporately and potentially personally as well.
Can’t Stomach Your
Annual Insurance Presentation?
Imagine What We
Hear Every Day
Each January we reflect on the past
year’s client-partner successes. As
with everything we do, levity is a fundamental ingredient in our ability to
continually drive client-partner outcomes.
As part of our annual exercise, we record the most preposterous
statements or “fluffers”, as they’re known, that we hear from the insurance
industry through our engagements.
You would assume, with the new level of scrutiny (Spitzer factor)
the industry is facing, that coming up with this year’s Fluffer List would be a
challenge. Quite the opposite is
true and actually 2004 offered so many “best in class” fluffers, it was the
first year we could not all agree on the single best whopper.
Debunking D&O
Insurance Myths:
Separating
Coverage Reality from Marketing Hype
Regardless of whether your approach to operational
risk is top-down or bottom-up, the financing of your organization’s
Directors’ and Officers’ Liability (D&O) exposure is likely addressed
through a traditional approach such as insurance. As anyone who has had the responsibility
to procure their organization’s D&O insurance can attest, it is one of
the most complex and costly insurance products sold.
With corporate governance on everyone’s
radar, there is an increase in demand for D&O liability risk financing
options. And as all commodity markets
respond to increased demand, the “Sellers” (“Intermediaries” and
“Manufacturers”) are coming out of the woodwork. With this and the abundance of
misinformation floating throughout the market both here and abroad, we felt
compelled to offer some basic buyer transparency.
Insurance Renewal
Got You Down?
Maybe it’s time for
a Captive Insurer?
It’s like a knee jerk reaction – the
insurance market changes direction and everyone’s running for the
alternative risk market at once.
Being your own insurer may not be the panacea you envisioned. Like when your plumber tells you this will
be his last house call, because starting next week he’s going to be a full
time day trader – in 1999 he was a genius, in 2002 he’s bankrupt!
So before you trade in your
conventional insurance program for an alternative approach, we suggest you
take more than a moment to assess the landscape. One thing is for sure, no business
alternative produces risk-free money.
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