Allocating Insurance Coverage for Mass Tort Liabilities: Current Developments, Options, and Practical Tips

Mass tort long-tail claims refer to latent personal injuries that do not manifest or are not asserted until years or decades after the injury-causing event or exposure: asbestos, talc, tobacco, glyphosate, abuse claims, PFAS, and so forth. Claims are usually filed in multiple state courts. Defendants face multi-year losses involving continuous, indivisible damages claims straddling multiple policy years and involving multiple insurers. They also have to plan for future claimants. Before applying any apportionment method, the parties have preliminary work to identify dates of losses and policies that provide coverage.

Further complicating things, over the past 50 years, both insurers and policyholders have implemented elaborate and sometimes labyrinthine ways to shift risk and minimize potential liability, all of which affect coverage and allocation, including self-insurance, captives, parametric insurance, reinsurance, and more. Gaps in coverage may arise from selling businesses or from discontinuation or modification of coverage for particular risks or the intentional expansion of exclusions.

Additional issues may arise from the increased involvement of private equity in owning insurance companies or in purchasing legacy liabilities. Recent U.S. Supreme Court decisions have given insurers a voice in bankruptcy proceedings and have reduced the ability of parties to obtain releases through bankruptcy.

Listen as the experienced panel of insurance coverage attorneys discusses the latest developments in liability allocation and best practices to advocate and resolve priority of coverage disputes involving allocation of liability.

I. Overview of long-tail claims

II. Identifying relevant policies

III. Contract language bearing on allocation issues

IV. Allocation methods

A. Dealing with present and future claims

B. Impact of complex risk transfer strategies

C. Impact of private equity

D. Impact of changes to bankruptcy law

V. Practical recommendations

The panel will review these and other significant issues:

• What is the effect of insurance ceasing to offer coverage for a particular risk?
• How does the language of the relevant policies affect allocation?
• Should an expert experienced in the economics of insurance help prepare proposed allocations?
• Has the entry of private equity into the insurance space altered the ability to efficiently navigate allocation issues?