PLRB Conference expands on the claims story

No one will dispute that the insurance industry has undergone significant changes over the last several years as it grappled with the pandemic and its impact on every aspect of business and daily life. However, some of the positive outcomes have been an expanded focus on innovation, the launch of the hybrid workspace, and the increased use and adoption of new technologies.

The opening keynote at this year’s PLRB conference in Orlando, Florida focused on change and telling the claims story.

Takeaway 1 – Change is inevitable, but we control how we view it.

“Change is hard,” shared keynote speaker Nick Tasler, an organizational psychologist and a bestselling author, but “growth is happening because of that change.”

Tasler said that change can create stress, fear and anxiety, but understanding that growth is happening as a result of this change affects how individuals view this experience.

“Every great achievement is preceded by a season of change and uncertainty,” emphasized Tasler. “It worried us before it inspired us and catapulted us to a new level of uncertainty. Every time you hear the change is hard story, say that growth is happening instead.”

Takeaway 2 – Watch for red flags.

In a session examining the numerous claims issues surrounding the Surfside condominium collapse, one of the repeating factors throughout the presentation involved the early indicators that there were problems that were ignored, covered over or just not addressed before the building collapsed.

Thomas Keller, a partner with Butler Weihmuller Katz Craig, and Paul Marsenison, construction practice leader with Rimkus Consulting Group, Inc., reviewed what preliminary investigations of the collapse have determined.

While the final report detailing the cause of the collapse has not been released, design failures, shoddy construction, damage and neglect all contributed to the collapse.

Issues such as water that pooled in the parking garage after it rained, indicated draining problems. Water leaking from the swimming pool, damaged the reinforcement structure. An investigation by an engineer in 2018 identified multiple issues that were not addressed and construction on an adjacent building may have also contributed to the collapse.

Takeaway 3 – Thorough investigations are vital to construction defect claims.

Kenneth Gilvary, P.E., principal/owner of Revision Engineering, Inc. and Jennifer Kalvestran, a partner with Gust Rosenfeld, PLC walked attendees through the process of investigating a construction defect claim and identifying liability, damages and possible coverage.

Construction defect claims generally arise from failures in workmanship; failures of a product or product choice, such as in the case of the claims involving Chinese drywall; design failures; professional errors or some combination of these issues.

The investigation involves collecting all pertinent documents, identifying key witnesses, obtaining witness statements, identifying all interested parties, determining where evidence will be retained, providing access to the evidence, while still maintaining the chain of custody, distributing any testing schedules and protocols to key parties, as well as providing full access to the property and full disclosure of any findings as a result of the investigation.

Takeaway 4 – Autonomous vehicles are coming.

Kenneth Williams with Segal McCambridge and Jacob Carr with Farm Bureau Insurance provided an in-depth look at the various liability and coverage issues surrounding autonomous vehicles.

When writing policies, insurers will need to define who is a driver under a policy which could be a person, the vehicle or both. In some instances, a driver could become a “user” of the vehicle and the types of coverage could change depending on who holds the liability on these vehicles. Liability could shift from the driver to the manufacturer due to the “autonomous” nature of the vehicle.

Because of the complexity of these vehicles, a simple tap on the bumper has the ability to affect sensors and cameras that aid in the ability to detect hazards. A more severe crash could require all of these sensors to be recalibrated or repaired, but who holds the liability if they are incorrectly replaced or installed? The company handling the repair, the manufacturer of the replacement parts or some other entity? Williams surmised that insurers will be more likely to total autonomous vehicles involved in crashes because of the additional liability involved in repairs. Again, how does an underwriter price this type of liability?

Government regulations could also come into play in terms of identifying or mitigating liability as exemptions could protect manufacturers from being sued for faulty products in the push to meet federal guidelines requiring a percentage of vehicles to be autonomous by a specific date. Insurers need to monitor state and federal regulations now because of their future impact on coverage.

Takeaway 5 – Beware of what you can’t see in a claim.

A session examining the remediation of and exposures from Category 3 water damage highlighted the importance of understanding the source of the water and the inherent dangers such as bacteria that can be lurking in the water.

Jeremy Beagle, CIH, and senior principal scientist with Sdii Global; William Mitchell, Sr., a partner with Conroy Simberg; and Steven Romero, CPCU, a large loss specialist with ICAT, addressed the various issues involved with these claims.

Wind-driven rain can be considered Category 1 (clean) or Category 3 (contaminated) water. Considerations are whether the water has become grossly contaminated or whether it has pathogenic, toxigenic or other harmful aspects to it. Testing can help determine the type of water and the hazards involved. It is also important to understand the type of water intrusion into a structure.

“There is expected and unexpected water intrusion, and you need to know the difference,” said Romero.

Approximately 1,700 people attended the PLRB conference. The 2024 conference will be held from March 17-20 in Boston.

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