Teresa Zink covered the Global Warming session at our Insurance Industry’s Top 10 Risks & Opportunities Conference for the inaugural issue of the Reinsurance Roundtable Continuum, a monthly journal of insights and analysis from the best reinsurance law minds available. This is just an excerpt from the report where Paul Bender of Zurich North America discussed “expected and intended.” He appeared on the panel with Andrew Marks, partner with Crowell & Moring.
General Liability Policies
Potential liability under general liability policies is an area of particular interest, and Bender said “the past 25 years is a great blueprint for what we might see going forward.” However, while there are many similarities between the environmental coverage litigation and the global warming litigation, there are also distinctions, according to Bender.
Potential coverage issues identified so far include occurrence, property damage (as opposed to economic loss), known loss or loss in process, trigger and allocation and application of the pollution exclusion, says Bender. And they occur in that order.
Occurrence is the threshold question, according to Bender. Policies typically limit coverage to claims arising from “an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected not intended from the standpoint of the insured.”
In the global warming context, the issue is what the policyholder knew or expected about how its greenhouse gas emissions would affect the environment. For example, Bender said, “how many power companies would expect or intend that as a result of burning fossil fuels in Florida, the people in Kivalina would be affected? There’s a strong argument that that is completely unexpected and unintended.”
However, he said, “you have to drill down.” Noting that burning fossil fuel is an intentional act, an insurance company’s response might be that it was expected or intended. Much like the argument that a person firing a gun through a wall didn’t expect or intend to harm the person on the other side of the wall, “is a natural and foreseeable consequence of an intentional act.” Insurers are likely to take the position that it is natural and foreseeable that global warming will result from burning fossil fuels, therefore it is the natural and foreseeable consequence of an intentional act.