Late Notice by Liability Insurance Policyholders as Excuse Not to Pay – of Notice, Covenants, Conditions, Material Breaches, Innominate terms, and American versus English Law

Courts continue to struggle with claims where the policyholder may not have provided notice as soon as one might have liked, and the coverage litigation typically centers on whether the dispositive argument is “no harm, no foul” — that is, policyholders will argue that coverage is not lost unless the insurer has been prejudiced in some fashion from the allegedly “late” notice. The Illinois Supreme Court and a Texas appellate court both have confronted this question recently, and these are largely consistent with recent holdings from New York’s highest court finding that the notice provision must be enforced as written – no ifs, ands or buts.

Read More

Taming the Lion(cover): Lioncover, Lloyd’s, Equitas, and the Central Fund(s)

W. Mark Felt or Hal Holbrook playing him said to “follow the money,” which has proven difficult in the instance of Lloyd’s of London, and a task made all the more important as asbestos and environmental liabilities continue to fall upon corporate policyholders in the US that purchased broad insurance in the 1950s, 60s and 70s through the London market. While lawyers and policyholders may be familiar with Equitas, the reinsurance runoff and claims-handling vehicles set up in the late 1990s to deal with liabilities arising under historical Lloyd’s policies, I have long believed that a key for litigators is something called Lioncover, a reinsurance vehicle originally set up to bailout important players at Lloyd’s who were involved in Peter Cameron Webb “managed” syndicate years of account. Lioncover, which I understand to be a wholly owned subsidiary of the Corporation of Lloyd’s and which houses the PCW business, initially was not reinsured into Equitas when Equitas was set up as part of the “Reconstruction and Renewal” of the Lloyd’s operation. It was later poured into the Equitas structure but also is explicitly backed by the Lloyd’s enterprise itself. Lioncover is a lever one can use to uncover the financial vehicles backing old Lloyd’s policies (which contra to popular myth are not backed solely by the assets of Equitas or by the trust funds in the US). Lloyd’s annual report for 2005 contains a few interesting crumbs worthy of note for Lloyd’s/Equitas watchers.

Read More