Our friend, colleague and fellow Commercial and Industry Arbitration and Mediation Group member, John DeGroote, has written and published in his Settlement Perspectives blog an excellent article offering some very practical and sound guidance to corporate policyholders who are confronted with litigation that may fall within the scope of their liability insurance, and who desire to increase the odds of securing coverage. John, who is President, Chief Legal Officer and Secretary of management and technology consulting firm BearingPoint, Inc. (formerly KPMG Consulting), was kind enough to seek our input on the article. It is entitled Insurance Coverage: 4 Rules and 10 Tips for Policyholders, and features a link to a longer, more detailed article John co-wrote on the same subject for an Association of Corporate Counsel (“ACC”) publication.
When I read John’s draft the first thing that struck me was that the rules and tips he offers are, for all intents and purposes, applicable to cedents pursuing reinsurance recoveries. He stresses, among other things, the importance of honesty, good faith, open communication and not colluding with the claimant in an effort to obtain coverage. These attributes are ones to which diligent, ceded claims personnel should aspire in their dealings with their company’s reinsurers, because they tend to increase the odds of achieving a successful recovery and avoiding time-consuming and expensive reinsurance disputes (all other things being equal).
John was also kind enough to quote my comments in his article, which are reproduced below:
As I discussed these rules with Philip J. Loree Jr. at the Loree Reinsurance and Arbitration Law Forum the other day, I learned that they don’t only apply to policyholders – apparently insurers must live by these same rules to collect from their reinsurers:
You would be surprised how frequently reinsurers contend that the carrier colluded with the policyholder in direct insurance coverage litigation. If the reinsurer can establish collusion concerning the fact, amount or allocation of coverage, or if the reinsurer otherwise shows that the carrier acted in bad faith, then the reinsurer will usually be relieved of liability for the claim. Like policyholders making direct insurance claims, carriers making reinsurance claims need to avoid even the appearance of collusion or bad faith, and following rules analogous to yours helps them do that.
Whether you happen to be a corporate or individual policyholder, or a cedent wishing to increase the odds of successfully collecting from reinsurers, John’s fine article comes highly recommended. In fact if you are at all interested in settlement and ADR, we highly recommend that you follow Settlement Perspectives. John writes high-quality, insightful and practical articles on a variety of pertinent topics. Who could ask for more?
Tags: Bad Faith, BearingPoint Inc., Cedents, Claims Handling, Collusion, Good Faith, Insurance Claims, John DeGroote, Reinsurance Claims, Settlement Perspectives
[…] as we mentioned in a recent post (here), our friend John DeGroote, the blogmaster of Settlement Perspectives , sought and published […]