At the end of 2021, ICLC had the chance to discuss some questions with Am Law 50 firm Debevoise & Plimpton's Eric Dinallo, Chair of the firm's Insurance Regulatory practice. The discussion focused on trends in insurance litigation in 2021, significant legislative and regulatory trends of the year, and predictions of what may happen in 2022. Below are his observations.
Insurance Coverage Law Center: What insurance litigation and court decision trends, including business interruption, did you see throughout 2021?
Eric Dinallo: The key litigation trend of this past year was business interruption. Hundreds of claims arising out of the COVID-19 pandemic continue to develop as backlogged courts work through the claims. So far, insurers have prevailed in nearly all of these cases, because policies covering business interruption typically state that coverage is triggered by the "direct physical loss of or damage to property." Additionally, most policies have a specific exclusion for damage caused by a virus or pollutant (a carve-out that was approved by regulators dating back to the original SARS outbreak). Plaintiffs have tried arguing that executive orders denying access to their businesses should activate "civil authority" coverage, but these claims generally have been dismissed.
Other key trends involve growing insurance litigation pertaining to cybersecurity coverage (including silent cyber risk), directors and officers insurance, and a California Supreme Court decision last summer (McHugh et al. v. Protective Life Insurance) which ruled that a 60-day grace period for life insurance premium payments established by the state in 2013 applies to all policies in force at that time – not just to policies issued after the rule went into effect.