KCIC was honored to sponsor the annual meeting of the American College of Coverage and Extracontractual Counsel (ACCEC) for the second year in a row.
This year’s meeting did not disappoint. The high-caliber content included panels on cyber coverage, policyholder conflicts around D&O panel counsel lists, and third-party defense bill reviews.
One important topic was saved for last: the American Law Institute (ALI) Restatement of the Law – Liability Insurance. Michael Aylward of Morrison Mahoney, John Buchanan of Covington and Burling, Laura Foggan of Wiley Rein, and Lorelie Masters of Perkins Coie reviewed some of the proposed changes up for vote this week at ALI’s 2016 meeting in Washington, D.C. All four panelists are participating in the draft process. You can find the latest updates from ALI here.
Of particular interest to me were Sections 43 and 44 in Chapter 3 on Allocation:
Section 43 provides for joint and several liability, up to full policy limits, when more than one insurance policy provided coverage to an insured for the same legal action.
Section 44 deals specifically with an exception for the pro-rata-by-year allocation for long-tail claims. Specifically, these long-tail claims covered by occurrence-based policies are to be allocated equally between “the first year in which the harm occurred and ending with the last year in which the harm would trigger an occurrence-based liability insurance policy”. As always, the practical application of the “by year” method can require many more assumptions to implement in a complex coverage program. There is an exception to the pro-rata rule stated in Subsection 2: when an insurance policy contains a term that alters the default rule, and cannot be harmonized with other terms, it will not be given effect. This reminded me of the recent Viking Pump ruling, which in essence provided for an all-sums allocation because of the non-cumulation clauses that seemed to otherwise prevent a pro-rata allocation.
Also during ACCEC, Mary Craig Calkins of Kilpatrick Townsend & Stockton officially took over the reins of President of the Board of Regents from Ned Currie of Currie Johnson & Myers. Founded in 2012, ACCEC is an invitation-only organization with members who are established counsel from both sides of the aisle.
In a future post, we will look more closely at changes to the ALI’s Restatement of the Law – Liability Insurance.