The previously secret Insurance Services Office (ISO) documents I mentioned in yesterday’s afternoon post, ISO Internal Documents Are Important Regarding COVID Litigation, show a few of the internal actions and analysis of coverage and what to do about a coronavirus pandemic event leading up to the Virus Exclusion Endorsement. These were never provided to the public when the pandemic struck last year, and people were asking about lost business income insurance coverage. Instead, the ISO, its executives, policy experts, and member insurance companies—including their attorneys making arguments preventing this disclosure—have had access to these previously secret documents. Importantly, they were not provided so that judges deciding these cases could consider them and determine if they were relevant and significant to their decisions.
The first insurance regulation all of us learn in this specialized field of business and law is that insurance involves the public trust. Insurance defense attorneys know this as well. If the insurance companies were all acting in Good Faith, they should have demanded that the ISO send all these documents out for transparent analysis and consideration from the beginning. Honesty is the only policy. Right?
Not when you are paid big bucks to argue for your insurance company client against its customers. Only then does the temptation to secrecy outweigh fair dealing.
Money and profits win in the mind of insurance executives and their insurance general counsel over fair dealing to the customers. Insurance claims executives could have requested that their attorneys and the ISO make all these internal documents available as a matter of good faith conduct. Indeed, their own coverage investigation requires them to consider them.
I was thinking about this when giving a speech in Atlanta yesterday. One former claims adjuster for a major insurer was in the audience and said that he was instructed to look at insurance numbers in two ways. The policy number was how he was paid. The claims number only showed how he was paid less.
These previously secret documents explaining coverage should not have been hidden if the insurance industry and its executives really are looking out for their customers interests. This is another example that demonstrates insurance defense counsel often argue whatever they can to win, regardless of what internal documents show. This is why litigation conduct should require good faith. First-party claim breaches can occur where insurance executives allow their counsel to make arguments which are contrary to what the insurance company internally recognizes is not correct.
We cannot allow insurance defense attorneys to argue out of coverage that their clients own internal manuals and documents show exist. This craziness is what lead to the ISO having to change a previous business income form regarding a requirement of a total shutdown of business—the insurance defense attorneys successfully argued out of coverage to judges when the intent was never to require a total shutdown.
As we all consider the few secret documents that have been turned over so far, I would suggest readers of this blog review the slide presentation made by policyholder attorneys arguing for coverage with these documents. Further, here is the transcript of a hearing in that case where those documents were shown.
These demonstrate how coverage arguments can be made for business interruption losses from COVID losses. Whether they will be relevant and significant to win the cases and the controversy remains to be seen. But at least these documents are starting to see the light of day so that we know the entire story about the Virus Exclusion.
Thought For The Day
Some secrets are meant to be taken to the grave, and that’s what I plan on doing with all mine. They’re not necessarily my secrets to tell. I’m the gatekeeper of other people’s secrets.