IRMI Update

Risk Management & Insurance Commentary, Tips, and Tactics
July 22, 2009 | Issue 210 | ISSN: 1530-7948


In This Issue


Colleague,

My colleagues here at IRMI have been very busy this summer. They have completed work on several new initiatives I think you might be interested in.

The new Management Liability Insurance Specialist continuing education and certification program, launched June 8, is designed to provide expertise in professional liability insurance fundamentals and the more specific nuances of D&O, employment practices, and fiduciary liability exposures and insurance. Priced very reasonably, members of RIMS enjoy a 10 percent discount. Insurance CE credit is available in most states.

Coming soon is the IRMI Construction Risk Manager, a no-cost e-mail newsletter that will provide risk management and insurance tips and news for those in or those who serve the construction industry. You also get a special white paper, "Effective Contractual Risk Transfer in Construction," when you subscribe. Simply register for the IRMI Construction Risk Manager on IRMI.com.

Our Risk Management & Insurance for Green Construction webinar will be kicking off soon and, of course, registration for the 29th IRMI Construction Risk Conference (in the Washington, D.C. area on November 1–5) is now open. The early-bird rate applies through August 31. New events include hot topic breakfast presentations on federal insurance regulation, a new networking reception, and a special lounge for CRIS certification holders. For the first time ever, we're offering 1-day passes for those unable to attend the entire conference. Everyone who is anyone in construction risk and insurance will be there, and you should be, too.

Lastly, we've set up an IRMI Group on LinkedIn for networking with our friends in the industry. Currently we are engaged in an interesting exchange on additional insured issues based on questions posed at one of our webinars. Consider joining the IRMI LinkedIn Group.

Thank you very much for your friendship and support, and have a good summer.

All the best,

Jack

Jack P. Gibson, CPCU, CRIS, ARM
President
International Risk Management Institute, Inc.


Featured Educational Event

Hot Topic of Federal Regulation

Two prominent insurance professionals will summarize the Obama Administration's initiatives that may affect insurance regulation and present opposing views on federal versus state insurance regulation. Learn more about these "Hot Topic" speakers, see the entire Conference agenda, and reserve your spot at the 29th IRMI Construction Risk Conference. You can also download a "business case" to show your boss why you should attend.


Risk Tip

Know When To Recover Defense Costs

A claim is made. The insurer agrees to defend the policyholder in the lawsuit under a reservation of rights. Later, after spending $100,000 defending the case, facts are disclosed prompting the insurer to deny coverage. After an orderly withdrawal of insurer-appointed counsel, the policyholder continues to defend the case and succeeds in having the case dismissed after spending an additional $50,000. Should one sue the other to recover the fees paid?

For policyholders, remember the advice learned a long time ago, "Don't ask the question if you don't want to hear the answer." Many states allow an insurer to recover defense costs it paid if the claim presented was not covered by the policy. Here, the policyholder could sue for $50,000 and potentially lose $100,000.

This could happen in California, for example. California courts have held that because premiums are collected only for covered claims, policyholders should not retain the benefits of defense costs paid for claims not covered by the policy. On the other hand, in Missouri, insurers may not recover previously paid defense costs even if the claim is determined to be not covered under policy. Missouri courts reason that policyholders are entitled to a defense until it is determined the claim is not covered by the policy.

From the insurer's perspective, one should do what one can to preserve any right to recover costs paid to defend claims eventually found to not be covered under the policy. In Florida, for example, insurers may recover costs only if possible reimbursement is spelled out in a reservation of rights letter accepted by the policyholder.

Nothing startling here. This tip is another application of "know the rules of the game before you play."

By: Joel R. Mosher, Of Counsel
Shook, Hardy & Bacon, L.L.P.
Kansas City, MO

GET PUBLISHED IN IRMI UPDATE: Send us a practical tip (less than 300 words) for identifying and managing risks, buying insurance, managing claims, or filling gaps in insurance coverages. We'll acknowledge your contribution as we did for Joel.
Submit an IRMI Update risk tip.


What's New in Your IRMI Library

Employee Benefits in Captives

Due to the rising cost of medical care and the simple fact that group medical insurance is a major cost center for corporate America, one of the hottest topics in risk management is the concept of covering employee benefits in captives. We've worked hard over the past few years to keep you well informed on this subject. Most recently, issues of both Captive Insurance Company Reports (CICR) and The Risk Report have addressed it. If you subscribe to CICR, you can read "Debunking EB Captive Formation Myths" in the platform to which you subscribe:

If you subscribe to The Risk Report, get Kate Westover's perspective on "Employee Benefits in Captives" here:

For summaries of other new and updated information in your IRMI library, go to What's New on IRMI Online or What's New in SilverPlume Sage.


Recent Articles on IRMI.com

New Expert Commentary

There are over 1,100 risk management and insurance articles on IRMI.com. Below you'll find summaries of some recent additions with links to the articles.


IRMI Featured Publication

E&O, D&O, and EPL Professional Development Program

The Management Liability Insurance Specialist (MLIS™) continuing education program provides specialized expertise in professional liability insurance fundamentals and the more specific nuances of directors and officers, employment practices, and fiduciary liability exposures and insurance. With MLIS behind your name, you'll have the competence, confidence, and credibility to deal with these complex and intimidating lines of insurance.

MLIS is recommended by the Risk and Insurance Management Society, Inc.® (RIMS), and members enjoy a 10% discount off the course fees. Learn more.


Your View

Exorbitant Executive Compensation

IRMI Update 209 asked readers for their views on whether executives at publicly held companies are overpaid and what, if anything, can be done about it. Below are some of the responses.

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