Chapter 11 announced - Part 3 - BSA's Toggle Plan

[TAHAWK]

What are the policy limits - the number that caps Hartford's maximum exposure?

 

Is there "excess" coverage?

[CynicalScouter]

19 minutes ago, TAHAWK said:

What are the policy limits - the number that caps Hartford's maximum exposure?

Here's the tricky part: at least SOME insurance policies had no limit. Some had aggregate caps (no more than $XX per occurrence, no more than $YY for the term of the policy).

Part of the enormous mess here is figuring out which polices applied in which years and did that year's policies have a cap? Etc.

Part of what the TCC has been demanding is answers to these questions. They haven't gotten very far.

[TAHAWK]

How does a compay determine a premium on a no limit policy.  

company  

[Eagle1970]

They don't, these days.  Years ago they estimated with a factor for expected occurrences.

[TAHAWK]

Our church's insurance has a limit.  Our homeownwrs' insurance has a limit.  Out twonship's h=general liability has a limit.  So who are "They"?

 

Standad CGL  language  4 25 21:

Commercial General Liability

A Commercial General Liability (CGL) policy provides your business protection from lawsuits brought by third parties alleging bodily injury, property damage, personal injury, and advertising injury.  In addition, the policy pays any sums you are legally obligated to pay in damages up to the applicable policy limit.

The CGL coverage form typically contains six different limits of insurance. Each limit represents the maximum amount the insurer will pay for a particular type of covered loss. The six policy limits are listed on the policy declarations page (information page) and typically appear as follows:

General Aggregate Limit	$2,000,000
Products / Completed Operations Aggregate	$2,000,000
Each Occurrence	$1,000,000
Personal and Advertising Injury	$1,000,000
Fire Damage Legal Liability	$   300,000

General Aggregate Limit

General Aggregate limit is the most that the insurer will pay for the sum of all personal injury, advertising injury, medical expense, bodily injury, and property damage claims, to which this insurance applies, sustained during the policy period, other than those involving the products and completed operations hazards.

. . .
Other Insurance

The CGL “other insurance” condition prescribes how the policy will respond to a covered loss when other insurance policies also cover the same loss. Options include:

• The CGL policy is the primary (it pays up to its applicable limit for a covered claim before the other policy is called upon)
• The CGL policy is excess (it does not pay until the other policy has paid its available limits)
• The CGL and the other policy to share responsibility for paying the claim on some proportional basis

[TAHAWK]

Insurance journal article on BSA insurance:  https://www.insurancejournal.com/news/national/2020/02/18/558661.htm

[T2Eagle]

1 hour ago, TAHAWK said:

How does a compay determine a premium on a no limit policy.  

company  

Back when the world, or at least you and I, were young, insurers wrote much more open policies than they would today.  I roughly understood this when I worked for an insurer a couple decades ago, but never well  enough to explain it.

The quickest sort of explanation that I could find for what these might have looked like comes from the wikipedia article on Lloyds.

"Unexpectedly large legal awards in US courts for punitive damages led to substantial claims on asbestos, pollution and health hazard (APH) policies, some dating as far back as the 1940s. Many of these policies were open-peril policies, meaning that they covered any claim not specifically excluded. Other policies (called standard, or broad) only cover stated perils, such as fire.

The classic example of "long-tail" insurance risks is asbestosis/mesothelioma claims under employers' liability or workers' compensation policies. An employee at an industrial plant may have been exposed to asbestos in the 1960s, fallen ill 20 years later and claimed compensation from his former employer in the 1990s. The employer would report a claim to the insurance company that wrote the policy in the 1960s. However, because the insurer did not fully understand the nature of the future risk back in the 1960s, it and its reinsurers would not have properly priced or reserved for it. In the case of Lloyd's, this resulted in the bankruptcy of thousands of individual investors who indemnified general liability policies written from the 1940s to the mid-1970s for companies with exposure to asbestosis claims."

[TAHAWK]

So what evidence is there that the BSA's polcies for the periods on question were "open-ended"?

[Eagle1993]

12 hours ago, TAHAWK said:

What are the policy limits - the number that caps Hartford's maximum exposure?

 

Is there "excess" coverage?

Look at Schedule 2 and 3 here. 

https://casedocs.omniagentsolutions.com/cmsvol2/pub_47373/876518_2293.pdf

This shows all of the various insurance policies for National and LCs. The question is what is coverage of each of these policies.  Then someone would have to see how many claims existed against that specific policy.  Then add all of those up.   The problem for Hartford (and others) is that have a ton of exposure through multiple policies.  I think the TCC is asking (through Discovery) how they came up with $650M.   The collation has already concluded the that $650M is not adequate.

[John-in-KC]

Remember that the commercial policies are both back up and service to BSA, it’s self insured for the first $1 or 2 M ( I forget which)

[ThenNow]

FYI, in the event it wasn't accessible. Reprinted with permission.

 

Peg Brickley WSJ 4.21.2021.pdf

Edited April 26, 2021 by ThenNow

[Eagle1970]

I was in insurance my entire career.  Years ago, there was no aggregate limit.  Therefore if you had a $1 Million per occurrence liability policy, the policy was not exhausted after a single occurrence payment in that amount.  Later, Aggregate limits were introduced to limit the total value of payouts.  I would venture a guess that there are some old policies without aggregates that cover acts occurring during the coverage period, rather than when the claim is made.

[MYCVAStory]

As an FYI, victims should rest assured that the TCC has a handle on the insurance issues.  This is the firm the TCC retained at the start of the bankruptcy as its insurance professionals.  https://pasichllp.com/

Specifically, this founder is the lead for the TCC: https://pasichllp.com/attorney/kirk-pasich/

[CynicalScouter]

18 hours ago, MYCVAStory said:

As an FYI, victims should rest assured that the TCC has a handle on the insurance issues. 

Right, so the TCC knows (or can pretty much guess) whether $650 million from Hartford is good/best reasonable offer or, as I suspect, a sweatheart deal BSA is cutting to get out of bankruptcy ASAP.

[Eagle1970]

If the BSA was aware of abuse and didn't put insurers on notice in a timely manner, there may be coverage implications.  That would be a significant reason to reach a settlement.