SIXTH CIRCUIT DJ/Federal Jurisdiction (OH) The Sixth Circuit has ruled in Admiral Ins. Co. v. Fire-Dex, LLC, No. 22-3992 (6th Cir. June 13, 2023) that an Ohio District Court did not err in declining to exercise jurisdiction over a DJ in which Admiral sought a finding that an “occupational disease” exclusion in its liability policies precluded coverage for claims by first responders who alleged that PFAS chemicals in the insured’s fire-fighting foam products caused cancers and other diseases. In particular, the Sixth Circuit agreed with the District Court that, as Ohio courts have yet to answer questions tied to insurance liability for PFAS manufacturing, those matters are best resolved by an Ohio court in the first instance.
SEVENTH CIRCUIT Coverage B/BIPA/Exclusions (IL) While acknowledging the conflicting decisions of Illinois District Courts as regards whether CGL policies cover BIPA violations, the Seventh Circuit has ruled in Citizens Ins. Co. of America v. Wynn Dalco Enterprises, No. 22-2313 (7th Cir. June 15, 2023) that there is an “intractable ambiguity” in the policy’s Distribution of Material in Violation of Statutes. The court found that while a “plain-text” reading of the exclusion might not render the protection promised by Coverage B “wholly illusory,” “such a reading would, as a practical matter, all but eliminate coverage for certain claims that are largely, if not exclusively, statutory in nature (intellectual property claims in particular) and that the policy by its express terms otherwise purports to cover.”
ELEVENTH CIRCUIT First Party/Appraisal/Appellate Procedure (FL) The Eleventh Circuit has ruled in Positano Place at Naples No. 1 Condominium Association, Inc. v. Empire Indemnity Ins. Co., No. 22-11059 (11th Cir. May 31, 2023) that a Florida District Court’s Order compelling appraisal in a dispute concerning the extent of a condominium association’s damage from Hurricane Irma was an interlocutory order and therefore not immediately appealable under 28 U.S.C. Section 1292(a)(1).
FLORIDA Assignment of Benefits/Appraisal The Florida District Court of Appeal has ruled that a trial court abused its discretion in denying an auto insurer’s motion to compel appraisal. In First Acceptance Ins. Co. v. At Home Auto Glass., 6D23-1192 (Fla. DCA6 June 9, 2023), the Sixth District ruled that the appraisal provisions reference to “amount of loss” was not restricted to the extent of physical damage. Rather, the court found that the appraiser’s determination of the amount of loss “necessarily includes determining both the extent of the covered damage and the monetary amount necessary to repair or replace the damaged property.”
ILLINOIS Pollution and Lead Exclusions/”Occurrence” The Appellate Court has ruled that a GL insurer must defend suits against the City of Sycamore by town residents who claimed they had been harmed by exposure to unsafe drinking water as a result of old and decaying water mains in the city. Whereas the trial court had ruled that the gradual deterioration of the municipal water system was not an “occurrence”, and that the claims in question were subject to a total pollution exclusion in these policies, the Second District held in LM Insurance Corp. v City of Sycamore, 2023 IL App. (2nd) 220234 (Ill. App. Ct. June 8, 2023) that these claims did not meet the standard for “traditional environmental pollution” that the Illinois Supreme Court had set in Koloms. In particular, the court ruled that in this case “there was no release, discharge or escape of a pollutant into the ground that caused the ground water to become contaminated. Rather, the complaint alleged that the water did not become contaminated until it was already in Sycamore’s water pipes …” The court also refused to find that allegations that lead had been released through the leaking pipes were subject to an absolute lead exclusion in the policy in particular, the court ruled that the underlying claims were not solely for lead pollution. It also alleged contamination as a result of iron and bacteria. Finally, the court held that this is not a case where a court would refuse to find an “occurrence.”
WISCONSIN Assignments/Asbestos The Supreme Court of Wisconsin has affirmed a policyholder victory in an asbestos case, declaring in Pepsi-Cola Metropolitan Bottling Company, Inc. v. Employers Ins. Co. of Wausau, 2023 WI 42 (Wis. May 24, 2023) that the pro-insurer ruling of the Court of Appeals must stand due to the fact “no three justices reach agreement to either affirm, reverse or affirm in part or reverse in part, the Court of Appeals decision.” In 2023, the Court of Appeals had ruled that Wausau was entitled to coverage as an assignee on various liability policies issued by Wausau between 1963 and 1971 to local foundries whose pump products are alleged to have caused asbestos injuries that have been brought against Pepsi-Cola. Wausau had argued that it could not be bound by an assignment that was entered into without its consent, and that the anti-assignment clause in its policies precludes indemnity coverage for injuries sustained.
OTHER DEVELOPMENTS OF NOTE
* * * Inside the Insurance Industry * * * A new report from S&P Global Intelligence finds that U.S. property and casualty insurers suffered their worst net underwriting loss in twelve years during the first quarter of 2023. The combined ratio for the period was 102.2.
A.M. Best reports that total premiums for cyber insurance have tripled in recent years and rose 50% in 2022.
AIG has announced that Sabra Purtill, who has been serving as its interim chief financial officer since January, will serve in that post on a permanent basis.
A report on “Homeowners Perception of Weather Risks” that was released by Munich Re and the Insurance Information Institute last week reveals:
Only 40% of homeowners have taken steps to protect their homes against extreme weather events.
36% of homeowners do not believe that their homes are at risk.
A growing number of moving to southern states such as Texas, Florida, Georgia, and North Carolina where they are more likely to be exposed to extreme weather.