Insurance and reinsurance disputes have become increasingly complex and contentious, with many properly characterized as "bet the company" cases. Handling these cases requires aggressive litigators who understand the business of insurance.
Twenty years ago, reinsurance disputes were few and far between. Differences of opinion over whether a specific outstanding balance was payable were resolved through business solution and compromise. The rare controversy which led to arbitration usually involved discreet and limited issues. When they occurred, disputes were submitted for the quick and efficient judgment of a convened panel of reinsurance professionals, and the overall business relationship continued forward as an "honorable engagement" among the parties.
Unfortunately, that is no longer true. The business is more complicated, with new market forces, increased competition, additional financial pressures, more financial restrictions, impairment and insolvencies, varied business models and increased regulatory oversight. Many reinsurers' unwillingness or inability to pay promptly have become a constant pressure and an inevitable aspect of doing business. No longer are disputes isolated, restricted or restrained. Today, reinsurance collection efforts are difficult, time-consuming and costly. Bases for non-payment spring from every aspect of the reinsurance relationship. The issues cut across lines of business, business models and implicate more and different issues.
In direct coverage cases, insureds often retain some of the top policyholder counsel in the country. These creative lawyers have developed novel strategies in an effort to recover from insurance carriers. These parties must know that the carriers have creative lawyers as well, who think outside the box and will not be intimidated. Coverage issues involving environmental liabilities, toxic torts and medical devices are not going away; they are just being refined. Coverage lawyers now must understand bankruptcy law and procedure as an increasing number of policyholders file for Chapter 11 protection with their only major asset being insurance policies. With the increasing publicity of corporate corruption, directors and officers coverage issues will inevitably be on the rise. Insurance carriers must know that their outside counsel are prepared to handle whatever coverage issues arise.
Pepper Hamilton LLP understands and appreciates how these business changes have affected insurance companies. We represent and advise insurance clients in a wide variety of matters, including: