Second Wave Allocation Issues: SIRs, Deductibles, Exhaustion, and More

June 25, 2015 1:40pm

Timothy R. Sullivan
McCormick Barstow LLP

Donna J. Vobornik

Dentons US LLP

Alex E. Potente

Sedgwick LLP

  • Policy years with insolvencies
  • SIRs and deductibles
    • Differences between SIRs and deductibles
    • Exhaustion of same
    • Key question for policyholders – how many SIRs do they pay?
    • Bankruptcy considerations
  • Number of occurrences
  • Non-cumulation clauses
  • Horizontal exhaustion – exhaustion by layers (primary vs. excess)
    • Who is responsible for gaps as coverage in a given layer exhausts?
    • Lincoln Electric
  • White space (i.e. underinsured years due to exhaustion or failure to buy enough coverage)
  • Stacking issues
    • Types of policies that can be stacked
    • Impact of SIRs, deductibles, etc.
  • Issues that can arise as policy layers exhaust
    • How do you prove exhaustion of underlying coverage?
    • What do you do when excess insurers refuse to acknowledge exhaustion?
    • Who controls the defense when some coverage is primary and the rest is excess or exhausted with no defense duty?