Reinsurers’ electronic data portrayed as a legal landmine

Reinsurers need to remember that electronic records represent potential legal landmines and should be treated cautiously, attendees of a New York reinsurence conference heard recently.
“Reinsurance once was thought of as a business governed by gentlemen’s agreements sealed with handshakes in Monte Carlo or Baden-Baden,” A.M. Best noted in a report on the New York conference. “Of course, there was more to it than that.
“[But the] World Trade Center trial (Part 1) demonstrated that electronic communications however trivial and easily forgotten they seem are vital legal evidence when disputes arise.
“E-mails, even cell phone records, are surprisingly difficult to destroy, are practically unalterable without leaving evidence of tampering, and are fast becoming many judges’ evidence of choice.”
David S. Cohen, a Washington-based partner with the law firm Milbank, Tweed, Hadley & McCoy, examined the trend at the seminar. “Cohen’s message was simple, yet spooky,” A.M. Best reported. “Anything communicated via e-mail or cell phone anything can be retrieved and probably will be sought by a judge once a dispute reaches court.
E-mail is particularly dangerous, Cohen said. He noted the medium’s rapid rise and ease of use means many people use it almost without thought, dispatching opinions and musings about both business and personal matters from the office and the home computer. But those e-mails are recoverable, even if deleted, and they all will live on somewhere, he said.
“It’s the equivalent of someone following you around all the time, transcribing what you say,” A.M. Best quotes Cohen as saying.
Statistics on electronic records as potential evidence show:
— 99% of all documents today are in electronic form, and most never are printed;
— about 60% to 70% of all corporate data reside in or are attached to e-mail; and
— electronic data are obtained in three-fourths of lawsuits involving Fortune 500 companies, and amendments to federal rules set to take effect Dec. 1 likely will make that trend universal.