As Hurricane Irene takes aim at New York and Connecticut (where I live), and the rest of the mid-Atlantic and New England, insurers are preparing to deploy their catastrophe teams and/or independent adjuster teams to handle claims in a region that has not been impacted by a hurricane in a number of years.  An article yesterday in PropertyCasualty360 predicts that Irene will be a multibillion dollar event for the insurance industry, and lists the companies with the largest written premiums in the states expected to be impacted.  Given that I spent most of my time for several years defending insurance companies in lawsuits from Hurricanes Katrina and Rita, as well as the Florida hurricanes of 2004, I thought I would offer here some thoughts on what claim executives and their counsel can be doing now to try to reduce bad faith and class action exposure:      

  1. Make sure your legal research on claim-handling statutes and regulations is fully up-to-date for all applicable jurisdictions.  These statutes and regulations are amended from time to time, so it is important to make sure that your research is fully updated.  Unlike hurricanes in recent years that impacted only one or two large states, it looks like Irene will affect a number of smaller states and adjusters likely will be working in multiple states, so they may need to handle some things differently depending on where they are working on a given day.  Some states have specific deadlines for certain claim-related activities, which may or may not be extended for catastrophes, and violation of these deadlines sometimes results in automatic penalties.  In the Hurricane Katrina class actions, insurers were able to successfully defeat class certification in federal court in numerous cases, but there were a few class actions certified in state court.  Some of the class actions that were certified in state court involved failure to initiate loss adjustment within 30 days, as required by a Louisiana statute.  See Oubre v. Louisiana Citizens Fair Plan, 961 So. 2d 504 (La. Ct. App. 2007); Orill v. AIG, Inc., 26 So. 3d 994 (La. Ct. App. 2009).  This is the kind of issue that insurers need to pay close attention to.  Applicable law on the calculation of actual cash value, depreciation and valued policy laws is also worth checking and updating in each applicable jurisdiction.
  2. If you have not done so recently, check your procedures and training with respect to general contractor overhead and profit.  This issue has been a major hotbed of class action litigation in recent years.  In the Katrina litigation, the federal courts refused to certify classes on this issue, but one state intermediate appellate court certified a class (that decision was later overturned by the state supreme court).  For more on this issue, see my recent article on Defending Class Actions on Coverage Issues.  What policy an insurer has in place and how it is implemented by adjusters can make a substantial difference if your company is sued in a class action on this issue.
  3. Think carefully about what instructions you are giving to adjusters on segregating wind damage from flood damage and anti-concurrent causation.  The instructions given can have a substantial impact on bad faith and class action exposure.  Take into account the Katrina decisions on this, including Leonard v. Nationwide Mutual Ins. Co., 499 F.3d 419 (5th Cir. 2007), Corban v. USAA, 20 So. 3d 601 (Miss. 2009), and Arctic Slope Regional Corp. v. Affiliated FM Ins. Co., 564 F.3d 707 (5th Cir. 2009).
  4. Keep in mind that in the Katrina litigation, some carriers faced significant problems from independent adjusting companies’ use of inexperienced and inadequately trained adjusters.  In some instances, the adjusters were not informed of or inadequately trained with respect to some procedures that the insurance company wanted them to follow.
  5. Start putting a plan together for coordinating the litigation that inevitably will follow the storm.  In Louisiana following Katrina, some plaintiffs’ lawyers filed suits in Baton Rouge before the New Orleans courts were even open.  Last year, I wrote an article with Louisiana lawyer Seth Schmeeckle on “Handling the Flood of Coverage Litigation:  Lessons Learned from Hurricane Katrina.”  Seth and I spent several years coordinating the Katrina litigation.  We talk about several important strategies that can be used, including: (1) establishing coordination among defense groups and using test cases for critical issues; (2) recognizing the unique issues of judicial ethics that can occur when a widespread catastrophe affects everyone living in the affected area; (3) moving to strike class allegations in putative class actions; (4) using methods to efficiently resolve large amounts of smaller suits, such as establishing a protocol to administratively stay cases, conduct written discovery, and then have settlement negotiations; and (5) taking measures to minimize possible class action tolling of suit limitation provisions in insurance policies.
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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.