Eric Hermanson Comments on Proposed Federal Consolidation of COVID-19 Coverage Litigation
On July 30, the Judicial Panel on Multi-District Litigation will hear a request by COVID-19 impacted businesses to consolidate pre-trial proceedings in thousands of business interruption coverage cases across the country. The move is opposed by insurers and some policyholder advocacy groups. Eric Hermanson, Partner in the Insurance Coverage and Bad Faith group, spoke to A.M. Best about the potential impact on the insurance industry.
Consolidation just isn’t how insurance works,” said Hermanson. “Each insurer has its own underwriting guidelines and its own preferred language. And in the underwriting process, each carrier tries to accommodate its insureds’ interests in slightly different ways. The result is a huge range of specific coverage arrangements that defy simple categorization,” he said.
Moreover, a single federal judge would have to take into account the applicable laws of multiple states. “Each state has its own insurance laws and rules of policy interpretation. A word may have one meaning in one state and another meaning in another,” Hermanson said.
Because of the multiplicity of policies and state laws, Hermanson said, consolidation could “tie up the resolution of individual claims for months, if not years, as a single court tries to organize, classify and wrestle with a sprawling mass of thousands of cases, most of which are going to turn on individualized, but relatively simple, factual determinations in the end.”
Read the full article from A.M. Best BestWeek. (subscription required)
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