By William T. Barker, Kirk R. Ruthenberg, and Kenneth J. Pfaehler, SNR Denton In their article “First-Party Bad Faith in Maryland: Does the New Statute Reach ‘Fairly Debatable’ Claims Denials” appearing in the September/October issue of Coverage , William T. Barker, Kirk R. Ruthenberg & Kenneth J. Pfaehler of SNR Denton initially state that Maryland common law never recognized a cause of...

By Mike Aylward and Eric Barber The article, “Getting the Drop on Excess Insurer: The Wisconsin Supreme Court Finds that an Excess Insurer Has a Duty to Defend in Johnson Controls in the Absence of Underlying Exhaustion,” by Michael F. Aylward and Eric Barber appears in the September/October 2010 issue of Coverage . The authors find that a recent decision adds to a growing list of exceptions to the rule...

By Kara Altenbaumer-Price and Amy Elizabeth Stewart In “Ponzi Schemes, and Money Laundering, and Defense Costs! Oh My!,” by Kara Altenbaumer-Price and Amy Elizabeth Stewart, appearing in the September/October 2010 issue of Coverage, the authors examine Directors and Officers coverage issues stemming from the criminal and civil proceedings against R. Allen Stanford and other executives of the Stanford...

"Straw-into-gold ideas are, like vampires, not only hard to kill, they also inevitably dig themselves up from the grave century after century." So wrote life insurance expert Steve Leimberg in course materials that he presented several years ago . Leimberg went on to state: " STOLI, with its many aliases and constantly mutating forms is just such an "undead" Dracula that, like the fabled vampire...

By William T. Barker, Partner, SNR Denton In Roehl Transport, Inc. v. Liberty Mutual Insurance Co. , the Wisconsin Supreme Court has recognized a new form of bad faith failure to settle: failing to minimize use of the insured’s deductible. This commentary critically examines that decision in light of other cases addressing an insurer’s duties regarding deductibles and retrospective premiums. One...

By Stephan Leimberg and Howard Zaritsky "life insurance is designed to replace or preserve wealth or income that is lost due to an insured's death, rather than create wealth or income." Ashkenazi v AXA Equit. Life Ins. Co., 2009 NY Slip Op 33111U (N.Y. Sup. Ct. Dec. 16, 2009) , provides a bird's eye view of how a life insurer decides if it will issue coverage based on a client's income and...

This compendium of articles written by regulatory officials and industry professionals offers the latest information about the Interstate Insurance Product Regulation Compact. Each piece is based on remarks that its author(s) presented to members of the Association of Insurance Compliance Professionals. Abbreviated versions of these pieces were originally published in the AICP's Journal for Insurance Compliance Professionals...

By William T. Barker & Ronald D. Kent, Partners, SNR Denton Cedell v. Farmers Insurance Co. 1 has clarified Washington law on discoverability of an insurer’s attorney-client privileged material in insurance bad faith litigation. Under Cedell, the “insurer has a right to the attorney-client privilege in a first-party-insurer claim for bad faith absent showing an established exception to the privilege...

By Stephan Leimberg and Howard Zaritsky "where the insurer is induced to enter into a contract for insurance by the actual fraud of the insured, the insurer is not required to return the premiums paid." The reasoning is that "a contrary rule would be an invitation to commit fraud." A life insurance company, Phoenix Life, sued Morello for rescission of a STOLI policy. PHL Variable Ins. Co. v....

By Jeff Kulesus, FLMI, Consultant, Milliman, Inc. Last summer Milliman conducted a survey to better understand the dynamics behind insurance industry participation in the Interstate Insurance Product Regulation Compact (IIPRC or Compact). At that time, 67 insurance companies were registered with the Compact. By the end of 2009, that number had increased by 10% to 74 companies. As of April 2010, 82 companies have...

By Stephan Leimberg and Howard Zaritsky The STAT is an intriguing use of annuities to avoid risk of loss in aggressive investments. It is available only because some annuity issuers attempt to tempt older annuitants by offering a full return of their premiums if the annuitant dies prematurely. It seems unlikely that annuity issuers will cease to offer this appealing feature, so that if they wish to avoid the use of...

By Stephan Leimberg and Howard Zaritsky The story below concerns yet another case of "STOLI ON THE ROCKS." EXECUTIVE SUMMARY: A U.S. District Court held that insurable interest was lacking in the purchase of a life insurance policy and that it was therefore void from inception. Principal Life asserted -- and the Court agreed -- that the Loshin Trust which purchased and owned a policy on the insured's...

By Jeff Kulesus, FLMI, Consultant, Milliman, Inc. Speed to market is a prime concern for new product launches. Perhaps no other factor has piqued speed ‐ to ‐ market interest as much as the Interstate Compact. The Interstate Insurance Product Regulation Compact (IIPRC, Interstate Compact or Compact) offers companies the opportunity to secure approval in 36 jurisdictions, including Puerto Rico in 60 days or...

By Stephan Leimberg and Howard Zaritsky "Investors who are interested in STOLI arrangements should consider that the insurers are litigating all of these cases that they discover, and that they are investigating policy claims carefully to discover STOLI arrangements. Furthermore, the insurers, while losing some of their suits, are having significant success in these actions, which is demonstrated in Lincoln National...

By Stephan Leimberg and Howard Zaritsky In LISI Estate Planning Newsletter #1655, Howard Zaritsky provided members with his analysis of what appeared to be the first reported “STAT” decision, W. Reserve Life Assur. Co. v. Conreal LLC, 2010 U.S. Dist. LEXIS 56340 (D.R.I. June 2, 2010) . In Western Reserve, the U.S. district court for Rhode Island sustained the use of “stranger-initiated annuity...

By Stephan Leimberg and Howard Zaritsky The decision in Principal Life Ins. Co. v. Lawrence Rucker 2007 Ins. Trust, 2010 U.S. Dist. LEXIS 89243 (D. Del. Aug. 30, 2010) is important for three reasons. First, most of the prior insurer victories have been limited to surviving a motion to dismiss, and these cases still must proceed to trial and opinion. Principal Life Insurance Co. v. Lawrence Rucker 2007 Ins. Trust...

By: Sean Cox, First Consulting & Administration, Inc. Have you been thinking about using the Interstate Insurance Compact to file your Life or Annuity product? Are you curious what is involved in making the actual filing? The following article will describe some tips for successfully submitting a “Compact Filing.” Compact filings are made via the SERFF application, and the look and feel of...

By Cande Olsen, Vice President, Actuarial Resources Corporation of Georgia Introduction This article will explain how the Interstate Insurance Product Regulation Commission (IIPRC or the Commission) product standards development process works, and will then give some important highlights of the requirements for selected IIPRC product standards that were developed from the process. Product Standards Drafting...

By David Morris and Karen Schutter, Interstate Insurance Product Regulation Commission The Interstate Insurance Product Regulation Compact ("Compact") is an important modernization initiative that is transforming the way asset-based insurance products are filed, reviewed and approved allowing consumers to have faster access to competitive insurance products in an ever-changing global marketplace. The Compact...

By R. Steven Rawls and Ryan K. Hilton Mealey's Litigation Report: Insurance Bad Faith I. Introduction Many insurers that issued liability policies to homebuilders in the southeast United States are receiving an influx of Chinese-drywall claims. Between 2004 and 2007, an estimated 100,000 homes in more than twenty states were built with defective drywall imported from China.[1] People who own homes with defective...

By William T. Barker, Robert C. Johnson & M. Keith Moskowitz, Partners, SNR Denton Minnesota formerly adhered to a minority rule that an insurer that has performed its own duty to defend an insured has no right to contribution from other insurers who were equally obligated to defend that insured. In Cargill, Inc. v. Ace American Insurance Co., the Minnesota Supreme Court overruled that rule. This commentary...

By Ronald D. Kent, Partner, SNR Denton 1 McReynolds v. American Commerce Insurance Co. 2 presented an issue at a doctrinal intersection: multiple claims with inadequate limits and claims subject to liens. The court held that an insurer could meet its obligation to consider the multiple offers in good faith by interpleading its policy limits and continuing to defend the insured. This commentary considers the case...

By William Barker, Partner, SNR Denton A recurring issue in the law of liability insurance is whether an insurer that has provided a defense under a reservation of rights (including a reservation of the right to recoup the cost of that defense if a court finds there was no duty to defend) can in fact recover its defense costs. On two consecutive days in August, the Tenth Circuit predicted that Colorado law would...

By Sherilyn Pastor and Alissa Pyrich, Attorneys, McCarter & English, LLP Insurance companies often provide or pay for the defense of a insured before questions of coverage under the policy are resolved. In some instances, this practice results in an insurer's paying for the defense of claims that are not within the scope of its indemnity obligation. Courts across the country have taken two distinctly different...

By Ted Howard, Partner, Wiley Rein LLP Addressing an issue of substantial current interest and broad disagreement as between liability insurers and policyholders on a nationwide basis, the Supreme Court of Pennsylvania, in its recent decision captioned American & Foreign Ins. Co. v. Jerry’s Sport Center, Inc. , held that an insurer that assumes the defense of its insured in connection with underlying claims...