Policyholder Pulse
The conflict between policyholders and insurers over “long-tail” insurance coverage took an unfortunate turn with a recent decision by the New York Court of Appeals on the issue of allocation for long-tail claims. On March 27, 2018, the court issued a decision in Keyspan that significantly impacts policyholders by decreasing the insurers’ proportionate share of financial responsibility and increasing the share imposed on the insured. This case involved long-term and continuous environmental contamination that began before comprehensive general liability insurance became available in the marketplace and continued, unobserved, across multiple policy periods. At issue was whether, under the “pro rata time-on-the-risk” method of allocation, Century Indemnity Company was liable to its insured, KeySpan Gas East Corporation, for years outside of its policy periods when there was no applicable insurance coverage offered on the market.