PRIMARY - EXCESS | THE BUSINESS OF LAYERS | HB EMERGING COMPLEX CLAIMS
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Transcript of PRIMARY - EXCESS | THE BUSINESS OF LAYERS | HB EMERGING COMPLEX CLAIMS
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The Business of Layers
The Trials and Tribulations ofAccessing Excess Coverage
Carrie ScottKCIC
Ilya KostenSelman
Breitman
David CoxMorgan Lewis & Bockius
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The Business of Layers
• How to access the next layer– Information that can be used–Policy language–Other influences on policy
exhaustion
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Primary vs. Umbrella/Excess Coverage
• Function of primary coverage
• Function of umbrella/excess coverage
• Relationship between layers (primary and excess) and where the policyholder fits in
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Loss Runs• Format–Hard copy, PDF, Electronic (e.g. Excel)
• Quality– Legibility, Structure of the file
• Level of Detail– Payments and dates, Volume
• Reporting– Legacy systems of insurers
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What can a policyholder do to make sure the loss run
can be used to prove underlying exhaustion?
Loss Run
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What are some things an excess insurer needs from a loss run of the underlying
policy that it typically finds lacking?
Loss Run
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What strategies have you utilized when loss runs are available to use as proof of
exhaustion, but are less than perfect?
Loss Run
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Policy Language
• Defense Costs–Defense not covered–Within limits– Excess of limits
• Multi-year Policy/Policy Periods < 1 Year
• Qualcomm language
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How can differing defense treatments (e.g. within or in
addition to limits) of underlying policies affect
when/how excess coverage is triggered?
Policy Language
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Are there ways to recover any
defense costs that the underlying policy did not
cover?
Policy Language
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What issues have you encountered when a policy has a stated annual limit,
but the policy period is less than 1 year or greater than
1 year?
Policy Language
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If a policyholder has a multi-year primary policy with differing aggregate
and occurrence limits, what kinds of issues might arise when trying to reach the
excess coverage?
Policy Language
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Must carriers pay their full limits to trigger the next layer of coverage? What have been the effects of Qualcomm language in a
policy?
Policy Language
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Supporting Impairment
• Claims Data–Source(s) of information–Data elements captured–Data consistency between
sources
• Other Consumption
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What are some objections an excess insurer may have regarding the underlying
insurer’s allocation/accounting of
exhaustion?(specifically if that underlying insurer has multiple policies)
Supporting Impairment
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How can a policyholder still prove exhaustion when it does not have complete claim documentation?
Supporting Impairment
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Is it enough to show an allocation/billing to an insurer to qualify as
exhaustion or do you need to show insurer payments
as well?
Supporting Impairment
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Settlement Agreements
• Coverage-In-Place• Cost Sharing• Structured Payment• Buy-out
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What kind of issues have you seen arise when a
structured payment agreement exists in the
underlying layer?
Settlement Agreements
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When a buy-out agreement is for less than the policy limit:
Do excess insurers usually require showing exhaustion of the stated policy limit?
What strategies can be used to overcome this?
Settlement Agreements
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When a CIP agreement specifies an allocation methodology for billing
underlying policies, what are some issues that the excess insurers (that did not sign the agreement)
may raise?
Settlement Agreements
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What types of complications might exist when the same insurer is both primary and umbrella/excess in the same
coverage block?Are there any potential
advantages?
Settlement Agreements
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How can policyholders and/or insurers use
electronic data when it comes to proving underlying policy
exhaustion during trial?What are some hurdles to the use of electronic data?
Electronic Data