Top East Insurance Journal Stories of 2023

December 29, 2023

Insurance Journal East readers showed keen interest in news about insurance agents’ responsibilities in 2023 including court cases involving an agent’s homeowner client with an unlisted dog; Harvard University’s agency and the school’s admissions fight; and Allstate’s trade secret battle with two former Massachusetts agents.

Another top story pitted an insurance agency’s commercial general liability insurer against its errors and omissions insurer in New Jersey. Readers also zeroed-in on workers’ compensation and employers’ liability; a multimillion dollar award to an employee who had a social anxiety disorder; a look back at the insurance issues around the Boston Marathon bombing 10 years ago; and one of New York’s largest insurance fraud prosecutions. The shuttering of mandatory photo inspections in New York caught substantial views, while pets fetched enough interest to grab the first and last positions in this year’s list.

Here are the top 10 Insurance Journal East articles of 2023.

1. Agent’s Failure to Disclose Dog Comes Back to Bite Homeowner

A Connecticut homeowner sued by a woman who alleges his dog bit her in the face is not entitled to insurance coverage because the homeowner’s insurance application, which was completed by his insurance agent, indicated he did not have a dog. A U.S. federal district judge granted Providence Mutual summary judgment, holding that the insurer had neither a duty to defend nor to indemnify because of the material misrepresentation. The judge also found that the homeowner had a responsibility to read the policy that his agent procured before signing it.

2. Workers’ Compensation Undercuts Employer Liability Exclusion, U.S. Appeals Court Rules

Since workers’ compensation shields an employer from liability, an insurer may not be able to rely on an employer liability exclusion in a commercial general liability policy to avoid claims, the Third Circuit of Appeals told Security National Insurance Co. (SNIC) in reviving a $30 million claim against the insurer related to a construction accident in which workers were injured. SNIC attempted to escape the employer liability claims for the accident with an exclusion in its policy and succeeded at the district court level in 2021. However, the appeals court reversed, finding that the language in SNIC’s policy around additional insureds that allowed it to apply the exclusion is ambiguous and thus the language must be construed against the insurer.

3. Harvard Claims Marsh Is to Blame for Its Loss of $15M in Coverage for Admissions Fight

Having lost two bids to recover $15 million from its insurer to cover costs related to its failed defense of its admissions policy, Harvard University is now looking to hold its insurance broker, Marsh, responsible. Harvard’s excess insurer Zurich American denied coverage for the high-profile litigation because it had not been timely notified of the case. When the university went to court to force Zurich to pay up, Harvard lost in federal district court in November 2022 and then again on appeal this past August. The courts found Zurich rightfully denied coverage because it did not receive timely notice of the litigation. In a new lawsuit filed in Boston, the university now claims that the failure to file a timely notice of its claim with Zurich was malpractice on the part of its insurance agency.

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4. Allstate Wins Trade Secret Tiff With Former Agents Allstate Insurance emerged victorious in litigation against two of its former Massachusetts exclusive agents who retained and used Allstate spreadsheets with policyholder information after the insurer terminated their agency contracts. Allstate won claims against the agents for breach of contract and trade secret misappropriation. The agents tried to avoid liability by arguing that state laws protecting independent agents applied to them, that the policyholder information did not qualify as trade secrets, and that Allstate did not own the information anyway. But on the strength of the language in its agency contracts, Allstate won summary judgment across the board in the federal district court in 2022 and now the agents have lost again, with the federal appeals court affirming the lower court’s decision.

5. Travelers Wins CGL v. E&O Battle in Insurance Agency Defamation Case Travelers Casualty Insurance Co. did not owe a duty to defend or indemnify its insured, CBIZ Borden-Perlman Insurance Agency, Inc., in a tort action in which Republic, as another insurer of B-P, bore the litigation and settlement costs, the U.S. Court of Appeals for the Third Circuit ruled in affirming a New Jersey district court grant of summary judgment to Travelers. Travelers insured B-P under a commercial general liability policy with a financial professional services exclusion that exempted from coverage “‘personal injury’ arising out of providing or failing to provide ‘financial professional services’ by any insured to others.” Republic insured B-P under an errors and omissions policy for its “professional services,” which included “providing insurance program and risk management services and advice.” The appeals court explained that its ruling is consistent with what an insured who has both policies would expect.

6. Judge Upholds $24M Award in Suit by Employee With Social Anxiety Disorder A federal district court judge in Massachusetts has upheld a $24 million jury award for a woman who sued her employer for retaliation and discrimination because of her social anxiety disorder. The employer, PPD Development, had asked the court to set aside the verdict or reduce the award, which it maintains is excessive and unsupported by the evidence at trial. But U.S. District Judge Leo T. Sorokin PPD’s defended the jury verdict and the multi-million dollar award for former PPD employee. The judge called the findings and conclusions of the jury “unassailable” in dismissing the call for a new trial. The judge said the in total is large, but so is the harm PPD inflicted on the employee.

7. A Look Back at Boston Marathon Bombing Insurance Claims Ten years ago, on April 15, 2013, two brothers placed pressure cooker bombs near the finish line of the Boston Marathon. The devices detonated within seconds of each other, killing three people, injuring more than 260 others, and causing property damage in the adjacent area. The hunt for the suspects caused additional property damage in the metro areas. The property damage raised the possibility that the federal Terrorism Risk Insurance Act (TRIA) would be triggered for the first time. But TRIA was not triggered because the Treasury never certified the Marathon bombing as a terrorist event. The industry and public never learned why the Marathon bombing was not immediately certified as a terrorist event. As it turned out, at least one of the criteria required by TRIA — that P/C losses total more than $5 million— was never reached. Insureds and private P/C insurers were on their own to settle claims.

8. New Law Lets New York Auto Insurers Waive Photo Mandate Starting Next May New York finally has a law on the books that allows insurance companies to waive pre-insurance photo inspections. Bills to permit inspection waivers have been introduced since 2009. Gov. Kathy Hochul recently signed one with the lofty title of “Auto Insurance Consumer Relief Act” (3172-A/S.5889) that passed the legislature this summer. Now insurers will be allowed to waive these inspections beginning May 15, 2024. Big I NY, which has long contended these inspections are unnecessary, called the signing “a great day” for policyholders and insurance agents.

9. Man Pleads Guilty to One of New York’s Biggest No-Fault Insurance Frauds Ever A New Jersey man has pleaded guilty to orchestrating a $60-$70 million fraud targeting no-fault automobile insurance companies in New York. U.S. Attorney Damian Williams reported that Bradley Pierre pleaded guilty to conspiracy to commit bribery and conspiracy to defraud the Internal Revenue Service (IRS). The decade-long long scheme involved medical clinics, doctors, business associates and law firms, including his wife’s firm. Officials said Pierre took advantage of a feature of no-fault insurance laws that requires insurers to pay auto insurance claims automatically for certain accidents. Insurance companies will often pay medical service providers directly for the treatment they provide to accident victims without the need to bill the victims themselves.

10. New Hampshire Governor Signs Pet Insurance Standards Into Law New Hampshire Governor Chris Sununu has signed into law legislation establishing pet insurance regulations. James Fox, property/casualty director at the New Hampshire Insurance Department, said the new legislation (HB249) establishes regulatory frameworks and consumer protections that are similar to those for other insurance products, “ensuring consistent, reliable definitions and transparent disclosure.” The law is based on model legislation approved last August by the National Association of Insurance Commissioners (NAIC). The new law will take effect January 1, 2024.

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