Add Kansas to the list of states recognizing that distances in time and space distinguish circumstances into multiple occurrences. American Family Mutual Ins. Co. v. Wilkins, No. 98, 2008 Kan. Sup. LEXIS 73 (Mar. 28, 2008).
Policyholders often seek discovery of carriers’ representations to reinsurers. The thinking is that if the carrier took a certain position with its reinsurers it must also take that position with its policyholders. Not so, says the United States District Court for the Southern District of Indiana. Irving Materials, Inc. v. Ohio Cas. Ins. Co., 2008 U.S. Dist. LEXIS 18692 (D. Ind. Mar. 10, 2008). There, the policyholder challenged a multiple-occurrence ruling on the grounds that the carrier had made a single-occurrence argument to its reinsurer. The court, however, ruled that the representations to the reinsurer were not material.
The Arizona Supreme Court handed down an interesting number of occurrences decision last week. Employers Mut. Cas. Co. v. DGG & CAR, Inc., 2008 Ariz. LEXIS 20 (Feb. 14, 2008). The court found multiple thefts to constitute a single occurrence. The decision, however, was shaped by language peculiar to the fidelity insurance policy: an Occurrence means “all loss caused by, or involving, one or more ‘employees,’ whether the result of a single act or series of acts.” It was also interesting to note the rule of interpretation that the court followed: “In interpreting an insurance policy, we apply ‘a rule of common sense’ thus, ‘when a question of interpretation arises, we are not compelled in every case of apparent ambiguity to blindly follow the interpretation least favorable to the insurer.’" Can’t argue with common sense, right? Wrong, I expect policyholder advocates to criticize the common sense rule sharply.
This week an intermediate appellate court in New York provided another decision rejecting an insured's attempt to avoid SIRs by bundling claims. International Flavors & Fragrances Inc. v. Royal Insurance Co., 2007 NY Slip Op 8122, *; 2007 N.Y. App. Div. LEXIS 10935 (10/30/07). The case involved workers' exposure to chemicals found in popcorn flavoring. The result, however, goes far beyond popcorn; the decision will surely be cited in other exposure cases such as asbestos.
For a good review of the caselaw concerning number of occurrences, read the June 5, 2007 decision by Justice Bernard Fried, Supreme Court of New York, New York County, ExxonMobil Corp. v. Certain Underwriters at Lloyd's. Determinations concerning number of occurrences are arguably "position neutral." Whether a single occurrence benefits policyholders or carriers depends upon the retention, limits, and claims. That said, Justice Fried presented a thoughtful rejection of a policyholder's efforts to treat multiple occurrences as one.
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