May 4, 2020 by Philip Cook, Chairman, Omega Insurance Holdings Inc.
As we optimistically look forward to at least the beginning of the end of the COVID-19 virus, our industry should start to prepare for the “pandemic of litigation” that will undoubtedly follow.
Our property and business interruption policies will be under attack, and so will our policyholders and their liability policies.
One of the by-products of working from home over the last several weeks is the fact that there has been time to read the multitude of articles and interviews in the insurance press and other media, dealing with potential insurance coverage disputes and potential liability exposures arising from COVID-19. While such materials are useful in terms of generating discussion, I am becoming increasingly concerned that they may also be fuelling arguments that could come back to bite us in the future.
Analyzing policy language is always a useful academic exercise. But when that analysis migrates to discussion of how the language could be challenged or interpreted against insurers, the unintended consequences could be quite detrimental.
The doctrine of contra proferentem still applies to contract disputes — where interpretation will go against the drafter of the document if the agreement or its terms are ambiguous. The key to this doctrine still resides in the fact that it applies when there is ambiguity.
Many recent articles focus attention on “intent” and “expectations of the parties.” While those factors may play a part in determining the consequences of ambiguous language, they don’t forcefully stress the fact that if the language itself is unambiguous, intent and expectations of the parties are of little or no consequence.
We would be much better served by sharing commentary on actual policy language. We’re a long way away from reaching the conclusion that a court will find ambiguity in our language at some time in the future.
Policy language can’t be changed retroactively. Discussing issues that would only be triggered if the language is found to be ambiguous could imply that we have already concluded that it is. Citing previous cases that may be similar or come close to supporting granting coverage not supported by the language only adds fuel to the argument. The fact is there has not been a situation that parallels COVID-19 before, so “similar” or “close” citations are not necessarily reliable comparisons.
Turning to the liability issues, recent articles have outlined the variety of potential liability exposures faced by individuals, corporations, medical professionals and governments, and even insurers, brokers and other service providers within our own industry.
Again, much of this material is useful for the purpose of reflection and academic discussion. However, it could also be detrimental if framed in such a way as to infer a conclusion that liability is actually supportable and the outcome inevitable.
It’s even more problematic when negative decisions are cited as alleged supporting case law for those conclusions. The plaintiff bar is quite capable of doing its own research without our providing of a detailed playbook. We may also be doing our policyholders a disservice by appearing to have prejudged the outcome of potential claims against them, before a thorough investigation of each individual situation.
None of us know exactly how the COVID-19 situation will eventually conclude or what things will look like when it is over. Similarly, none of us know how the “pandemic of litigation” will conclude for our industry. Some will come through unscathed, some will survive but be forever changed, some will enter into a “new normal,” and some unfortunately may become deceased.
What we can be confident of is that our industry will survive — as it has for well over 300 years. It will continue to serve customers not just because they are our customers, but because we are all part of the human race.
This is a plea for circumspection when we make public comments, as the audience is invariably wider than we think.
Philip Cook is an insurance industry veteran, having worked in the Canadian P&C space since 1967. He is chairman of Omega Insurance Holdings Inc., which includes an insurance management company (Focus Group Inc) which he established in 1986, and a specialty insurer (Omega General Insurance Company) which he established in 2004.
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