PLUS Special Section

Excess carriers—on the alert

Litigious environment affects excess carriers

By Phil Zinkewicz

The increasingly litigious environment that is affecting all types of professional liability claims, such as D&O and E&O; the need on the part of excess lines underwriters to become more aggressive in monitoring claims activity; and distracting “deals” that are sometimes struck between primary carriers and insureds in settlement situations will all be topics of discussion at next month’s PLUS annual. The panel is titled “Surveying and Surviving the Wreckage Below: All About Excess.”

“The stakes are high, and the potential to tap excess layers of coverage, in the event of a loss, is greater than ever,” says Anjali Das, Esq., partner in Wilson Elser Moskowitz Edelman & Dicker LLP, who will moderate the panel. Panelists will include: Andrea Lieberman, managing director, Marsh; Howard Suskin, Esq, partner in Jenner & Block; and Marjorie Thompson, vice president, professional liability, Allied World Assurance Co. According to Das, the panel will analyze and discuss managing relationships among the various parties, why an excess carrier must actively monitor claims and evaluate coverage issues, and the unique defenses, rights and duties that apply to excess carriers.

Das, whose law firm represents both primary and excess carriers, says that, in the last few years, exposures in D&O and E&O have been eating through the underlying limits of coverage. “Economic issues and assorted Ponzi schemes and other frauds have led to class action lawsuits,” she says. “Not too many years ago, it used to be that excess insurers were sitting at the top of the tower, snoozing as it were. That is not the case today.”

Excess carriers are being caught off guard, Das says, as settlements are creeping into the upper layers. Bermuda carriers have never seen a situation like this before, she says. “Everyone is being brought to the table.”

She continues: “Then, too, special arrangements are being struck in settlements. In the past, excess carriers relied on primary carriers to do their due diligence. Today, they must be aware of what is happening on the primary end during settlement discussions. There is more tension between primary carriers and excess carriers than ever before. Excess carriers need to be more aggressive in getting necessary information up front,” she says.

Another panel that will deal with the excess market is titled “Excess & Surplus: The Solutions-Based Market for Professional Exposures.” The panel will be moderated by Letha Heaton, co-chair of the Communications and Technology Committee, NAPSLO Board of Directors. Panelists will include: Michael Daly, global practice leader, liability claims, XL Insurance Co.; Nancy Davies, vice president, professional liability, RSUI; Phil Holderness, senior vice president, executive and professional liability, Westrope; Jean M. Nelson, associate vice president, claims division, Scottsdale Insurance Co.; and Brad Phillips, vice president, professional liability, Admiral Insurance Co.

This panel will examine the E&S industry as the “harbinger of change for the insurance industry whenever there is a need for unique insurance solutions because of economic, political, social and technological upheaval.” The panelists will look at how the E&S market plays a pivotal role in the professional liability market.