July 1, 2002
Many corporate policyholders are concerned not only about the steady flow of long-tail claims which may threaten their future, but also about the collection risk on the insurance they expect to cover those claims. Recent judicial decisions recognize a simple solution: collect the insurance now. For most of the past century, the insurance industry heavily marketed liability insurance for unknown risks. Now, the unknown risks insured under older occurrence-based policies, such as asbestos and environmental claims, have emerged in force. Today’s insurance market presents additional uncertainties, particularly concerning the solvency and viability of many insurance companies, including the London insurance market. Three recent decisions illustrate the current recovery solution. Two involve asbestos bankruptcies, but asbestos is not the only liability, and bankruptcy is not the only procedure, for which this is a viable solution.