American Association of Insurance Management Consultants

Library of Articles

•Wrongful Designation by Thomas M. Braniff, JD, CPCU and Robert P. Gaddis, JD; •The Essential Bookshelf for Expert Witnesses by Kevin Quinley, CPCU, ARM, AIC; •The 411 on Becoming an Expert Witnesses by Elise M. Farnham, CPCU, ARM, AIM, CPIW; •Working as an Expert Witnesses by Douglas R. Emerick; and •“Be Careful What You DON’T Ask For” By Bill Wilson, CPCU, ARM, AIM, AAM.

Michael Gay

Owner/Principal Consultant

Michael Gay Consulting LLC

In today’s business climate more focus is placed on lean operations. This trend is becoming increasingly more commonplace as corporations are divesting of business lines and returning to core competencies. As decentralization continues to grow and corporations are relying on supply and sales agreements with non-related parties, the impact of a supplier or customer’s loss on a business’ operations increases substantially.

Scott E. Bushnell

Principal Owner – Executive Forensic Accountant

Business Interruption Consulting

Maintaining client relationships is critical for insurance brokers and agencies, especially given the fact that developing new commercial clients involves a significant time investment to understand the client’s business and risks and to implement solutions for risk transfer. Once insurance coverage is in place and policies are issued, the focus of the agency switches to servicing the account. The agency is happy. The client is happy. But what happens when your client experiences a significant property loss?

Scott E. Bushnell

Principal Owner – Executive Forensic Accountant

Business Interruption Consulting

Preparing business interruption claims takes thoughtful planning and insightful analysis, clearly communicated to all of the parties involved in the claims process. One of the most important factors is the breadth and depth of analyzing relevant financial information related to interrupted business operations. Although this may seem like an intuitive step, there is often a gap between the internally prepared financial information and the analysis to determine lost profits. Application of due diligence results in a smooth claim process, quicker payment from the insurer and a fair and equitable recovery.

Scott E. Bushnell

Principal Owner – Executive Forensic Accountant

Business Interruption Consulting

“Since its creation, “claims made” wording’s use has expanded outside of the “profession” and professional liability realm, finding use in diverse liability coverages. But the roots of “claims made” wording, and its most common use still, is found in covering the exposures created by a “professional’s” activities. As seen by the list of true “professions,” professionals are individuals who provide a service to society which, if done poorly, could cause extreme or irreparable personal or financial harm. … The expansion of claims made policy forms beyond “professions” caused the basic “claims made” concept to diverge and evolve into two distinct forms. One evolutionary branch commenced in professional liability coverages (known also as “errors and omissions” coverages in this series) and the second branch grew out of the financial services industry and the need for directors and officers liability protection, fiduciary liability and employment practices liability (referred throughout this series as “executive liability” coverages). Although both branches attach to the tree at the same point; greatly different “claims made triggers” have resulted. Additionally, coverage terms, conditions and definitions differ between the two branches.”

Frederick J Fisher

President

Fisher Consulting Group, Inc.

“Lawyers are advocates, and as such try to paint the best picture of the facts for their clients. It’s a good strategy in front of a jury or arbitrator, but not with an expert. The non-confidential information about the case that the other side is going to learn anyway should not be kept from an expert. Otherwise, a strongly favorable expert opinion can tumble like a house of cards on crossexamination. It can ruin your whole day, not to mention the case. Sometimes, your expert can do you an immense favor (if hired early) by identifying a truly hopeless case—one that should be settled before the other side realizes just how good their case is. But he or she can only do that with an accurate knowledge of the facts. A caveat: the attorney’s opinions about the case and confidential communications with the client should not be given to an expert, or they may become discoverable. There are ways to get damaging information to an expert without breaching the attorney‐client or work‐product privileges”

Frederick J Fisher

President

Fisher Consulting Group, Inc.

“Diminishing limits policies create a host of potential problems for insurance company claim departments. As is well known the insurance industry has long been plagued with “nuisance” claims. While in some instances insurance companies make quick settlements of nuisance claims to avoid defense cost expenditures, in others, insurers will attempt to resist such claims to avoid setting a precedent, thereby sending a message to the plaintiff’s bar that nuisance claims will not be honored. Considering that defense costs are deducted from the policy’s aggregate limits, either course of action places an insurance company in a difficult position. … “

Frederick J Fisher

President

Fisher Consulting Group, Inc.

“Directors and officers liability policies have long been issued on a “pure claims-made” basis (a phrase this writer first coined in 1990). That is, they were written with no prior act date (also known as a retroactive date). As a result, wrongful acts of the directors and officers dating back to corporate formation were covered as long as the claim was first made against the insured during the policy term. To minimize the singular risk D&O insurers were taking (i.e., “what probability exists that a claim will be first made against the insured during the policy term?”), they began using a “continuity date” and/or a “prior/pending litigation exclusionary” date that was the same as the inception date of the first policy issued. The date the insured first obtained coverage thus became known as the “first coverage date” so the “continuity date” could be honored at renewal. This was reinforced by a warranty within the application for coverage stating that the insured was or was not aware of facts, incidents, or circumstances that could give rise to a claim in the future.”

Frederick J Fisher

President

Fisher Consulting Group, Inc.

Akos Swierkiewicz

Principal

Insurance & Reinsurance Consulting & Outsourcing Services (“IRCOS, LLC”)

Akos Swierkiewicz

Principal

Insurance & Reinsurance Consulting & Outsourcing Services (“IRCOS, LLC”)

Akos Swierkiewicz

Principal

Insurance & Reinsurance Consulting & Outsourcing Services (“IRCOS, LLC”)

From the Spring 2018 issue of the CPCU CLEW Interest Group newsletter.

Kevin Quinley

CEO

Quinley Risk Associates LLC

Whether defending or litigating, success with Insurance Agent E&O cases can hinge on the discovery process and avoiding the paper blizzard that often comes with generic production requests. Produce too many documents and it is a waste of your valuable time. Produce too little and you might not find what you need. Since most insurance agents no longer utilize paper files, knowing exactly what to extract out of a computer system could make or break your case.

Lee Hoffman

President

Lee M. Hoffman & Associates, LLC

I do not truly understand the rationale in suing the company adjuster in a lawsuit against the Insurance Company, since he has no independent duties apart from those of the Insurance Company. However, Directors and Officers of corporations owe fiduciary duties to corporate stockholders and to the Corporate business entity itself.

Bruce Heffner, Esq.

Independent Company Legal Consulting / Attorney at Law

Boomerang Recoveries, LLC & Law Office of Bruce P. Heffner,

I was often amazed at what I could only discern as an argument by a Plaintiff’s attorney concerning an insurance claim where he had never bothered to read the policy or have a true of understanding of insurance.

Bruce Heffner, Esq.

Independent Company Legal Consulting / Attorney at Law

Boomerang Recoveries, LLC & Law Office of Bruce P. Heffner,

Corporate Counsel is not properly the attorney to specifically respond for the Insurance Company to a suit against the Insurance Company.

Bruce Heffner, Esq.

Independent Company Legal Consulting / Attorney at Law

Boomerang Recoveries, LLC & Law Office of Bruce P. Heffner,

Insurance Companies need to strive for competent officers and directors.

Bruce Heffner, Esq.

Independent Company Legal Consulting / Attorney at Law

Boomerang Recoveries, LLC & Law Office of Bruce P. Heffner,

A hair-weaving certificate requires 300 hours of training. An individual selling reinsurance needs zero education and faces zero testing.

Bruce Heffner, Esq.

Independent Company Legal Consulting / Attorney at Law

Boomerang Recoveries, LLC & Law Office of Bruce P. Heffner,

It appears that the recent change in The State of Michigan workers compensation act extends Michigan’s jurisdiction to all Michigan Residents no matter where in the US (or the World) the resident is hired, works or is injured.

Lee Hoffman

President

Lee M. Hoffman & Associates, LLC

For many small to mid-sized companies there is the overriding element of misplaced trust in the broker and a gross misunderstanding of their own duties.

Bruce Heffner, Esq.

Independent Company Legal Consulting / Attorney at Law

Boomerang Recoveries, LLC & Law Office of Bruce P. Heffner,

I have not figured out why reinsurance is not fully regulated, as is insurance. I have heard the logic that the parties to the contract are equally sophisticated, and therefor no regulation is necessary. The problem with that logic is that it assumes a premise that is false. Many of the parties do not have equal bargaining power; they are not equally qualified to enter into the transaction and there are no real arms length negotiations. Many small companies spend more on reinsurance each year then they could possibly receive from the sale of the building they occupy.

Bill Wilson

Founder and CEO

InsuranceCommentary.com