Insurer and Policyholder Insolvency: Marshaling the Rights and Obligations of Insurers, Policyholders, Reinsurers

This CLE course will review the unique issues that counsel, for insurers, reinsurers, policyholders, or claimholders, face when either the insurer or the insured becomes insolvent. The panel will discuss the insurer's obligations when it is facing insolvency, what happens to insurers that cannot meet their obligations, and how policyholders can obtain coverage and indemnity for which they have paid. The program will also discuss the other side of the issue and what duties insurers owe policyholders and claimants when the policyholder files for bankruptcy or simply stops operating, cannot or is not allowed to assist with a defense, or cannot fund ongoing premiums.

Although the insurance industry is highly regulated, insurers do fail and often in the wake of a high volume or high value of claims. Currently, the insurance industry and legal commentators alike are warning of a tsunami of "silent" cyber and privacy claims as well as claims arising from natural disasters that many insurers are unprepared to meet.

Company-ending events must be addressed by counsel representing the insurers as well as their panel counsel and policyholder counsel seeking to be paid on claims. All parties must understand what happens when an insurer is failing and may not be able or allowed to cover claims for which premiums have been paid. Resolving open claims can take years, and a secondary market has developed for purchasing certain types of claims owed by distressed insurers, and to a lesser degree, unresolved claims. When an insurer fails, officers, directors, brokers, and others who should have advised policyholders about the health of the company can be the targets of litigation.

On the other hand, a different set of issues arises when policyholders become insolvent or file bankruptcy or even simply go out of business but leave liabilities that an insurer must defend and indemnify even if there is no one to assist with a defense.

Listen as our authoritative panel of insurance practitioners guides insurance counsel for both policyholders and insurers through complex issues arising from insurer insolvency, and the insurer's duties when claims are made against insolvent, bankrupt, or defunct insureds.