I think it is good to have insurance in case of a hurricane or tornado, or someone robs your house.
I couldn't have said it bettery myself!
Wednesday, March 28, 2012
Friday, March 2, 2012
The insurance industry is doing just fine, apparently
Van Mayhall, consistently one of the most interesting bloggers on big-picture insurance issues (and, no, I'm not trying to damn with faint praise), has done it again. Over at Insurance Regulatory Law he has written this post asserting that in contradiction to public perception the insurance industry has suffered few losses in recent years.
Friday, February 24, 2012
Superior Court rules that insurer was not required to continue relationship with agent begun under CAR
In Calianos v. Commerce Ins. Co., 2012 WL 414464 (Mass. Super.), Judge Fabricant of the Massachusetts Superior Court held than an auto insurer was not liable to an agent when it terminated high risk policies assigned to it under the Commonwealth Automobile Reinsurers (CAR) program, when CAR was replaced by Massachusetts Automobile Insurance Plan (MAIP).
Under the old CAR program, all insurers who wrote auto insurance policies in Massachusetts were required to accept all high-risk applicants for insurance, but they had the option of merely administering the policies and ceding the profits and losses from such policies to the residual market.
An insurance agent who was unable to obtain a voluntary contract with an insurer could apply to CAR to be assigned as an Exclusive Representative Producer, or ERP. CAR appointed each ERP to an insurer.
The Commissioner of Insurance replaced CAR with MAIP, which I discussed in these posts (hit the link and then scroll down). Under MAIP, insurers are assigned, based on their market share, policies issued to high risk drivers, and are required to absorb any losses from those policies. MAIP became effective in 2008.
Under MAIP, agents are no longer assigned on an involuntary basis to insurers. Only agents who are licensed as Assigned Risk Producers, or ARP's, service the high-risk market.
While CAR was still in effect in 2006, CAR assigned insurance agent Jason Calianos as an ERP to Commerce.
In January, 2009, after MAIP replaced CAR, Commerce informed Calianos that he would no longer have authority to solicit or bind new policies and that Commerce would non-renew his existing policies. Commerce then issued notices of nonrenewal to Calianos's customers.
Calianos sued Commerce, alleging that Commerce had amended or terminated its agreement with him without the requisite notice, and that it declined to renew his customers' policies, depriving him of commissions.
The court held:
Under the old CAR program, all insurers who wrote auto insurance policies in Massachusetts were required to accept all high-risk applicants for insurance, but they had the option of merely administering the policies and ceding the profits and losses from such policies to the residual market.
An insurance agent who was unable to obtain a voluntary contract with an insurer could apply to CAR to be assigned as an Exclusive Representative Producer, or ERP. CAR appointed each ERP to an insurer.
The Commissioner of Insurance replaced CAR with MAIP, which I discussed in these posts (hit the link and then scroll down). Under MAIP, insurers are assigned, based on their market share, policies issued to high risk drivers, and are required to absorb any losses from those policies. MAIP became effective in 2008.
Under MAIP, agents are no longer assigned on an involuntary basis to insurers. Only agents who are licensed as Assigned Risk Producers, or ARP's, service the high-risk market.
While CAR was still in effect in 2006, CAR assigned insurance agent Jason Calianos as an ERP to Commerce.
In January, 2009, after MAIP replaced CAR, Commerce informed Calianos that he would no longer have authority to solicit or bind new policies and that Commerce would non-renew his existing policies. Commerce then issued notices of nonrenewal to Calianos's customers.
Calianos sued Commerce, alleging that Commerce had amended or terminated its agreement with him without the requisite notice, and that it declined to renew his customers' policies, depriving him of commissions.
The court held:
- Commerce did not breach Calianos's contract. His CAR contract terminated when CAR was replaced by MAIP.
- Commerce was not required by MAIP to continue its relationship with Calianos.
- Commerce did not act in bad faith when it did not renew Calianos's policies on a voluntary basis, because it was not required to do so and never had a voluntary relationship with him.
- Commerce was not liable for intentional interference with contractual relationships, because Commerce had no contractual duty to renew the CAR policies.
Thursday, February 16, 2012
Sunday, February 12, 2012
In huge victory for insureds, SJC holds that measure of multiple damages in 93A claim is underlying judgment
On Friday, in a case which has been closely watched by those on both sides of the insurer/insured divide (and by those of us who straddle the divide), the SJC has overturned in no uncertain terms a ruling by the Massachusetts Appeals Court regarding calculation of multiple damages in a 93A claim against an insurer for unfair settlement practices. The Appeals Court had held that the multiple damages in a 93A claim where the underlying tort claim has gone to judgment are calculated by the loss of use of settlement funds -- in other words, interest from the time a reasonable settlement offer should have been made until it actually was made. I was shocked by the Appeals Court decision when it came out, because it contradicted the plain language of Mass. Gen. Laws ch. 93A s. 2, which states that multiple damages are based on the underlying judgment.
The SJC also held that to recover under ch. 93A the insureds do not have to prove that they would have accepted a reasonable settlement offer had one been made.
In January, 2002, Marcia Rhodes received catastrophic injuries including permanent paraplegia when a tractor trailer rear-ended her car. She and her family sued the truck driver, his employer, and the company to which he had been assigned by his employer.
At trial in September, 2004, the plaintiffs received a trial judgment of approximately $11.3 million. During the appeal process the plaintiffs settled the claim with the defendants' insurers.
Before settlement the plaintiffs filed a 93A claim against the insurers for failing to enter into a prompt, fair, and equitable settlement.
The trial court ruled on the 93A claim that excess carrier AIGDC had violated ch. 93A, but that the violation did not cause the plaintiffs any damages prior to trial because they would not have accepted even a timely reasonable offer prior to trial. The trial court also held that the 93A damages for AIGDC's failure to settle immediately after trial were the loss of use of the settlement funds.
On appeal, the Massachusetts Appeals Court held that the plaintiffs suffered damages as a result of both AIGDC's pre- and post-trial conduct. Like the trial court, it held that the measure of damages was the loss of use of the settlement funds.
On Friday, February 10, 2012, the SJC reversed. In Rhodes v. AIG Domestic Claims, Inc., 2012 WL 401034 (Mass.), the court first held that the plaintiffs are not required to prove that they would have accepted a prompt, reasonable settlement offer if the insurer had made such an offer.
It then held that the measure of damages is the underlying judgment is the plaintiffs' tort action, not loss of use of settlement funds.
The basis for this decision is Mass. Gen. Laws ch. 93A, s. 2, which states, "For the purposes of this chapter, the amount of actual damages to be multiplied by the court shall be the amount of the judgment on all claims arising out of the same and underlying transaction or occurrence."
The SJC also held that to recover under ch. 93A the insureds do not have to prove that they would have accepted a reasonable settlement offer had one been made.
In January, 2002, Marcia Rhodes received catastrophic injuries including permanent paraplegia when a tractor trailer rear-ended her car. She and her family sued the truck driver, his employer, and the company to which he had been assigned by his employer.
At trial in September, 2004, the plaintiffs received a trial judgment of approximately $11.3 million. During the appeal process the plaintiffs settled the claim with the defendants' insurers.
Before settlement the plaintiffs filed a 93A claim against the insurers for failing to enter into a prompt, fair, and equitable settlement.
The trial court ruled on the 93A claim that excess carrier AIGDC had violated ch. 93A, but that the violation did not cause the plaintiffs any damages prior to trial because they would not have accepted even a timely reasonable offer prior to trial. The trial court also held that the 93A damages for AIGDC's failure to settle immediately after trial were the loss of use of the settlement funds.
On appeal, the Massachusetts Appeals Court held that the plaintiffs suffered damages as a result of both AIGDC's pre- and post-trial conduct. Like the trial court, it held that the measure of damages was the loss of use of the settlement funds.
On Friday, February 10, 2012, the SJC reversed. In Rhodes v. AIG Domestic Claims, Inc., 2012 WL 401034 (Mass.), the court first held that the plaintiffs are not required to prove that they would have accepted a prompt, reasonable settlement offer if the insurer had made such an offer.
It then held that the measure of damages is the underlying judgment is the plaintiffs' tort action, not loss of use of settlement funds.
The basis for this decision is Mass. Gen. Laws ch. 93A, s. 2, which states, "For the purposes of this chapter, the amount of actual damages to be multiplied by the court shall be the amount of the judgment on all claims arising out of the same and underlying transaction or occurrence."
Thursday, February 9, 2012
Fantastic resource on professional liability insurance
The Washington, D.C. firm of Jackson & Campbell has posted a 50-state review of professional liability insurance coverage. Click here for the link.
Tuesday, February 7, 2012
First Circuit holds no coverage for breach of contract damages
In Lopez & Medina Corp. v. Marsh USA, Inc., __ F.3d __, 2012 WL 229856 (1st. Cir.), the First Circuit Court of Appeals held that coverage under a liability policy does not extend to breach of contract damages.
The insured argued that the policy covered breach of contract damages because in it the insurer agreed to pay "all sums which the insured shall become legally obligated to pay as damages."
The court, which was deciding a case on appeal for the United States District Court for the District of Puerto Rico, noted that there was no Puerto Rican case law on point. It based its holding on the unanimous opinions of other jurisdictions as well as insurance treatises.
The insured argued that the policy covered breach of contract damages because in it the insurer agreed to pay "all sums which the insured shall become legally obligated to pay as damages."
The court, which was deciding a case on appeal for the United States District Court for the District of Puerto Rico, noted that there was no Puerto Rican case law on point. It based its holding on the unanimous opinions of other jurisdictions as well as insurance treatises.
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