Sophisticated cyber crimes have been of great interest in the insurance world for the past decade, but relatively low-tech schemes are also a risk to policyholders and to insurers. Tricking an employee to transfer funds to an unauthorized account is a scam that existed prior to wide-spread use of email and the Internet. For example, the fraudster calls the bank employee, pretending to be his supervisor, authorizing a payment to be made ASAP, or a seller provides “updated” information for a wire transfer at a real estate closing, and the title company sends the funds to the wrong account. More recently, perpetrators of these types of social engineering tricks have made use of email to deliver fake payment instructions, and have infiltrated company or employee accounts to obtain necessary credentials or to create the impression of authority. Depending on the facts of a claim and the terms of specific insurance contracts, policyholders who are the victims of such scams may seek coverage under cyber liability policies or under traditional lines such as crime / fidelity and general liability.
Insurance practitioners in Texas are familiar with the so-called “eight corners rule” applied by Texas Courts to determine whether an insurer has a duty to defend a suit against its insured. The “eight corners rule” is simply summarized:
Under the eight-corners rule, the duty to defend is determined by the claims alleged in the petition and the coverage provided in the policy. The rule takes its name from the fact that only two documents are ordinarily relevant to the determination of the duty to defend: the policy and the pleadings of the third-party claimant. Facts outside the pleadings, even those easily ascertained, are ordinarily not material to the determination and allegations against the insured are liberally construed in favor of coverage.
Many insurance policies contain a “war exclusion,” which states that there is no coverage for loss resulting from “war,” “warlike action by a military force,” or “insurrection, rebellion, [or] revolution.” Does the exclusion apply when a militant faction—specifically Hamas—shoots rockets into an area where the insured is conducting activities?
While courts on some issues may seem bent on finding coverage, there are some notable exceptions. Courts generally have faithfully applied claims-made-and-reported provisions even when an insured has had continuous coverage. An Arkansas federal district court recently did just that when it concluded that a school district failed to give its insurer timely notice of a claim under consecutive claims-made-and-reported policies.
Hurricane Season 2019 is upon us as of June 1. NOAA’s crystal ball predicts an “average” hurricane season this year; to NOAA, “average” means “a likely range of 9 to 15 named storms (winds of 39 mph or higher), of which four to eight could become hurricanes (winds of 74 mph or higher), including two to four major hurricanes (category 3, 4 or 5; with winds of 111 mph or higher).” By comparison, NOAA predicted that 2018, which produced Hurricane Michael, the first Cat 5 hurricane to come ashore in the continental U.S. since 1992, would be “near or above-normal.” And 2017 produced Harvey, Irma, Maria and Nate.
The California Supreme Court has agreed to decide for the first time whether class actions alleging violations of the Telephone Consumer Protection Act (“TCPA”)—which prohibits certain unsolicited fax, telephone or text message advertisements—are covered by a CGL insurance policy. See Yahoo! Inc. v. National Union Fire Ins. Co. of Pittsburgh, Pa., Case No. S253593 (Cal. S. Ct., March 27, 2019). The Ninth Circuit asked the California Supreme Court to resolve the issue as a certified question of unresolved state law. See Yahoo! Inc. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 913 F.3d 923, 926 (9th Cir. 2019).
The fallout from the Illinois Supreme Court’s January 25, 2019, opinion in Rosenbach v. Six Flags Entertainment Corp., 19 IL 12316, continues. Rosenbach settled the dispute of who qualifies as an “aggrieved person” under the Illinois Biometric Information Privacy Act (“BIPA”), and in doing so opened the floodgates for this litigation to proliferate. The immediate result was a sharp increase in the filing of BIPA class actions as well as the lifting of stays of the numerous cases pending that were awaiting the Rosenbach ruling.