PRESENTED FEB. 25, 2016

1. The Business of Layers
The Trials and Tribulations of
Accessing Excess Coverage
Carrie Scott
KCIC
Ilya Kosten
Selman Breitman
David Cox
Morgan Lewis & Bockius

2. The Business of Layers
• How to access the next layer
–Information that can be used
–Policy language
–Other influences on policy exhaustion

3. Primary vs. Umbrella/Excess Coverage
• Function of primary coverage
• Function of umbrella/excess coverage
• Relationship between layers (primary
and excess) and where the
policyholder fits in

4. Loss Runs
• Format
– Hard copy, PDF, Electronic (e.g. Excel)
• Quality
– Legibility, Structure of the file
• Level of Detail
– Payments and dates, Volume
• Reporting
– Legacy systems of insurers

5. What can a policyholder do to make
sure the loss run can be used to prove
underlying exhaustion?
LossRun

6. What are some things an excess
insurer needs from a loss run of the
underlying policy that it typically
finds lacking?
LossRun

7. What strategies have you utilized
when loss runs are available to use as
proof of exhaustion, but are less than
perfect?
LossRun

8. Policy Language
• Defense Costs
– Defense not covered
– Within limits
– Excess of limits
• Multi-year Policy/Policy Periods < 1 Year
• Qualcomm language

9. How can differing defense treatments
(e.g. within or in addition to limits) of
underlying policies affect when/how
excess coverage is triggered?
Policy Language

10. Are there ways to recover any
defense costs that the underlying
policy did not cover?
Policy Language

11. What issues have you encountered
when a policy has a stated annual
limit, but the policy period is less
than 1 year or greater than 1 year?
Policy Language

12. If a policyholder has a multi-year
primary policy with differing
aggregate and occurrence limits,
what kinds of issues might arise when
trying to reach the excess coverage?
Policy Language

13. Must carriers pay their full limits to
trigger the next layer of coverage?
What have been the effects of
Qualcomm language in a policy?
Policy Language

14. Supporting Impairment
• Claims Data
–Source(s) of information
–Data elements captured
–Data consistency between sources
• Other Consumption

15. What are some objections an excess
insurer may have regarding the
underlying insurer’s
allocation/accounting of exhaustion?
(specifically if that underlying
insurer has multiple policies)
Supporting Impairment

16. How can a policyholder still prove
exhaustion when it does not have
complete claim documentation?
Supporting Impairment

17. Is it enough to show an
allocation/billing to an insurer to
qualify as exhaustion or do you need
to show insurer payments as well?
Supporting Impairment

18. Settlement Agreements
• Coverage-In-Place
• Cost Sharing
• Structured Payment
• Buy-out

19. What kind of issues have you seen arise
when a structured payment
agreement exists in the underlying
layer?
Settlement Agreements

20. When a buy-out agreement is for less
than the policy limit:
Do excess insurers usually require
showing exhaustion of the stated
policy limit?
What strategies can be used to
overcome this?
Settlement Agreements

21. When a CIP agreement specifies an
allocation methodology for billing
underlying policies, what are some
issues that the excess insurers (that
did not sign the agreement) may
raise?
Settlement Agreements

22. What types of complications might
exist when the same insurer is both
primary and umbrella/excess in the
same coverage block?
Are there any potential advantages?
Settlement Agreements

23. How can policyholders and/or
insurers use electronic data when it
comes to proving underlying policy
exhaustion during trial?
What are some hurdles to the use of
electronic data?
Electronic Data