Wo r king in Har mo ny with Yo ur L e gal De par tme nt to Pr - - PowerPoint PPT Presentation

W W W . C HIC A G O LA N D R ISKFO R UM . O R G

Wo r king in Har mo ny with Yo ur L e gal De par tme nt to Pr

• te c t the

Co mpany’s Bo tto m L ine

Iryna Sladkevych Matt Jeweler

2

Who We Are

• Ir

yna Sladke vyc h - Risk and Insur anc e Manage r , E sse ndant – E sse nda nt is a who le sa le distrib uto r o f wo rkpla c e e sse ntia ls – Re spo nsib le fo r c o o rdina tio n o f risk ma na g e me nt & insura nc e : pla c ing insura nc e pro g ra m, a nd ma na g ing c la ims, sa fe ty a nd lo ss c o ntro l initia tive s

• Matt Je we le r

– Counse l, Pillsbur y Winthr

• p Shaw Pittman

–

Pillsb ury is a la w firm with a ppro xima te ly 700 la wye rs in 20 o ffic e s a ro und the wo rld

–

Ma tt’ s pra c tic e fo c use s o n re pre se nting c o rpo ra te po lic yho lde rs in insura nc e ma tte rs, fro m po lic y ne g o tia tio n to re so lutio n o f c la ims a nd litig a tio n, if ne c e ssa ry

3

Ag e nda

• Why it is impo rta nt fo r RM a nd L

e g a l to c o o rdina te

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Co mmo n e xa mple s whe re a la c k o f c o o rdina tio n c a n ha ve se rio us (a nd c o stly) c o nse q ue nc e s

• I

de ntifying a nd e sta b lishing a re la tio nship with “g o -to ” c o unse l

• K

e y ite ms a b o ut RM tha t L e g a l ne e ds to kno w

• K

e y insura nc e issue s a nd c o nc e pts tha t L e g a l ne e ds to kno w

• T

he ro le o f o utside c o ve ra g e c o unse l

• T

ips fo r b e tte r c o he sio n b e twe e n RM a nd L e g a l

• Q&A

4

Ho w L a c k o f Co o rdina tio n Be twe e n L e g a l a nd Risk Ma na g e me nt De pa rtme nts Ca n Ha rm the Co mpa ny

• Writte n de ma nd c o me s in to L

e g a l a nd RM do e sn’ t kno w a b o ut it, the n six mo nths la te r a la wsuit is file d a fte r po lic y re ne ws

 Cla im no t “first ma de ” during the la te r po lic y pe rio d  Po ssib ly no c o ve ra g e due to e xc lusio n fo r c la ims re la ting to prio r c la ims o r

c irc umsta nc e s tha t the insure d wa s a wa re o f prio r to po lic y pe rio d

 L

a te no tic e issue

5

Ho w L a c k o f Co o rdina tio n Be twe e n L e g a l a nd Risk Ma na g e me nt De pa rtme nts Ca n Ha rm the Co mpa ny

• F

ie ld do e s no t info rm RM o r L e g a l o f a n issue , the n la te r a de ma nd/ la wsuit is ma de

 Po ssib ly no c o ve ra g e due to e xc lusio n fo r c la ims re la ting to prio r c la ims o r

c irc umsta nc e s tha t the insure d wa s a wa re o f prio r to po lic y pe rio d

 L

a te no tic e issue

6

E xa mple :

• E

PA a ud it a t the c usto me r’ s lo c a tio n re ve a le d vio la tio ns

• Yo ur c o mpa ny ha d re c o mme nd e d c e rta in pra c tic e s tha t c usto me r use d a nd fo r

whic h the y ha ve b e e n c ite d

• Custo me r se nt a first no te a d vising o f vio la tio ns to the fie ld ma na g e r b ut it wa s

ne ve r e sc a la te d to RM o r L e g a l o r to a ny se nio r le a d e r, a nd thus no tic e o f c irc umsta nc e wa s ne ve r g ive n to the E &O c a rrie r

• Six mo nths la te r, the c lie nt re c e ive s pe na ltie s fro m the E

PA d ue to the a ud it vio la tio ns in the a mo unt o f $100K a nd se nd s a d e ma nd le tte r to a c o rpo ra te o ffic e fo r re imb urse me nt b e c a use the pro c e sse s the y ha ve e sta b lishe d whe re b a se d o n yo ur c o mpa ny’ s re c o mme nd a tio ns c la iming tha t yo ur pro fe ssio na l a d vic e wa s inc o rre c t a nd yo u a re re spo nsib le pa rty fo r the vio la tio ns

• Yo u sub mit the c la im a nd the insure r d e nie s c o ve ra g e b a se d o n la te no tic e

What do yo u do ? Who he lps yo u to r e so lve dispute with the insur e r ?

7

Ho w L a c k o f Co o rdina tio n Be twe e n L e g a l a nd Risk Ma na g e me nt De pa rtme nts Ca n Ha rm the Co mpa ny

• L

e g a l hire s de fe nse c o unse l no t a ppro ve d b y insure r

 Pe rha ps no c o ve ra g e fo r de fe nse c o sts de pe nding o n po lic y la ng ua g e ,

a nd a t the ve ry le a st so me po rtio n o f ra te s ma y b e uninsure d

8

E xa mple :

• Cyb e r e ve nt o c c urre d o ve r the we e ke nd, a nd the Cyb e r Se c urity Re spo nse pla n did no t

list pre -a ppro ve d c o unse l to ha ndle the inc ide nt

• Ge ne ra l Co unse l a ppo ints a firm with whic h he ha s c o nne c tio n a nd wo rke d in a pre vio us

c o mpa ny o n a simila r issue

• Afte r re po rting the Cyb e r e ve nt to the c a rrie r’ s e me rg e nc y ho t line , the c o nta c t pe rso n

a ppo inte d fo r this c la im is CI SO who sc he dule s a c a ll with the insure r first thing in the mo rning ne xt da y. RM is no t no tifie d o f a n a tto rne y a ppo intme nt o r o f the sc he dule d c a ll. T he c a ll ha ppe ns a nd it a ppe a rs tha t a n a tto rne y re pre se nts yo ur c o mpa ny a s a ppo inte d b y Ge ne ra l Co unse l, b ut a djuste r invite s the ir pa ne l c o unse l in a ntic ipa tio n tha t yo ur c o mpa ny ha s no t hire d a ny o the r la w firm.

• No w b o th a tto rne ys a re pre se nt o n the c a ll whic h c re a te s c o nfusio n a nd unne c e ssa ry

frustra tio n o f a ll pa rtie s invo lve d. L a te r o n, the a djuste r a ppro ve s yo ur a ppo inte d c o unse l ho we ve r, the ra te s fo r o ur a ppo inte d c o unse l a re twic e hig he r a nd a djuste r do e s no t a ppro ve the pa ne l a tto rne y o r the hig he r ra te s.

Ho w c o uld this situatio n have be e n avo ide d? Why do yo u think this happe ne d and c o uld it have be e n pr e ve nte d if RM was invo lve d and fully info r me d by L e gal?

9

Ho w L a c k o f Co o rdina tio n Be twe e n L e g a l a nd Risk Ma na g e me nt De pa rtme nts Ca n Ha rm the Co mpa ny

• L

e g a l se ttle s a la wsuit a g a inst the c o mpa ny witho ut the insure r’ s c o nse nt

 Po ssib ly no c o ve ra g e pe r po lic y c o nditio n pro hib iting se ttling witho ut

c o nse nt

 Ma y b e sa ve d b y a pre judic e re q uire me nt, de pe nding o n wha t sta te la w

wo uld g o ve rn the insura nc e c la im

10

Who I n L e g a l Sho uld RM Re a c h Out T

• E

sta b lish a c le a r pro c e ss b e twe e n L e g a l a nd RM de pa rtme nts (no tific a tio n, c o mmunic a tio n, a ppro va ls)

• I

de ntify po ints o f c o nta c t in L e g a l fo r the RM te a m

• I

f yo u ha ve multiple “in-ho use ” a tto rne ys, ide ntify fo r whic h ma tte rs the y sho uld b e invo lve d

• Co o rdina te with L

e g a l to ide ntify o utside la w firms a nd fo r whic h ma tte rs the y sho uld b e invo lve d

–

Disc uss whe the r RM c a n c o nta c t tho se firms dire c tly o r ne e d pre -a ppro va l fro m L e g a l, a nd c o nve y this pro to c o l to RM

11

K e y I te ms Ab o ut RM T ha t L e g a l Ne e ds T

• K

no w

• L

e g a l ne e ds to kno w to c o nne c t with RM o n the c la ims, insura nc e , o r la wsuits re c e ive d

• L

e g a l sho uld ha ve a c le a r unde rsta nding o f ro le s a nd re spo nsib ilitie s in RM a nd who m to re a c h o ut to o n va rio us ma tte rs

• Disc uss a nd ide ntify o utside c o unse l de pe nding o n the ma tte r a nd

pro vide this info rma tio n to RM to ha ve a pre -a ppro ve d list o f pro vide rs a c c e pte d b y the c a rrie rs

• Ha ve yo ur T

PA/ c a rrie r ho ld a n a nnua l le g a l re vie w o f se rvic e s the y pro vide o n c o mpa ny’ s b e ha lf (e .g ., wo rke rs c o mp) a nd inc lude L e g a l to ma ke sure the y a re in a g re e me nt with the ir q ua lific a tio ns, ra te s, jurisdic tio na l e xpe rtise , e tc .

12

E xa mple s:

• I

f re so lve d wo rke rs c o mp c la im ma y re q uire injure d wo rke r to g o thro ug h ADA pro c e ss if the re is a dispute o n full re c o ve ry o r in c e rta in jurisdic tio ns it c a n po te ntia lly b e c o me a n issue a nd b e ne fits wo uld ne e d to b e c o ntinue d re g a rdle ss o f the re le a se a nd fo r a s lo ng a s the ma tte r is no t re so lve d in c o urt

–

Also , po te ntia lly b e c o ming a n e mplo yme nt ma tte r

• Spe c ia l c o ve ra g e tha t ma y b e re q uire d with c e rta in type s o f b usine ss

(e spe c ia lly impo rta nt whe n wo rking with M&A o r stra te g y g ro up o n a c q uiring ne w c o mpa nie s)

13

K e y I nsura nc e I te ms Ab o ut Whic h L e g a l Ne e ds T

• Be I

nfo rme d

• Wha t c o ve ra g e the Co mpa ny ha s

–

Amo unt o f po lic y limits

–

I de ntify o c c urre nc e vs. c la ims-ma de

• Brie f o ve rvie w o f c o ve ra g e s pro vide d unde r e a c h po lic y a nd wha t

type s o f lo sse s a re po te ntia lly c o ve re d

• RM c a n pro vide e xa mple s o f po ssib le lo sse s tha t c o mpa ny ma y like ly

fa c e b a se d o n the uniq ue kno wle dg e a nd e xpe rie nc e o f the RM, a nd e xpla in ho w insura nc e fits in (o r do e sn’ t)

14

I mpo rta nt Co ve ra g e Co nditio ns/ Re q uire me nts F

• r L

e g a l T

• K

no w

 Pro mpt no tic e

 Und e rsta nd ing o f c la ims ma d e c o ve ra g e a nd re po rting pe rio d  E

xc lusio ns fo r kno wle d g e / c la ims/ suits tha t e xiste d prio r to po lic y pe rio d (prio r a c ts)

 Othe r stric t d e a d line s fo r g iving no tic e

 Ha ve c le a r unde rsta nding a s to who a nd whe n sho uld g ive a no tic e

• f c irc umsta nc e , inc ide nt o r a c la im to the c a rrie r unde r pa rtic ula r

c o ve ra g e

 Be fo re g iving a no tic e to the c a rrie r, a ppo int a c o nta c t to de a l with

a n a djuste r(whe the r fro m L e g a l o r RM de pa rtme nts) to ma ke sure the info rma tio n tha t c o me s fro m the c o mpa ny is sync hro nize d a nd a ll pa rtie s inte rna lly a g re e o n wha t is b e ing c o mmunic a te d to the c a rrie r

15

I mpo rta nt Co ve ra g e Co nditio ns/ Re q uire me nts F

• r L

e g a l T

• K

no w



Insure r ma y ha ve the rig ht to a ppo int, o r a ppro ve / d e ny, d e fe nse c o unse l o r the ir ra te s 

In-ho use c o unse l ne e d to re a lize the y ma y b e c o nstra ine d in who the y hire



Ide a lly, ha ve yo ur la w firms a nd a tto rne ys’ ra te s pre -a ppro ve d with the insura nc e c a rrie r b e fo re the c la im o c c urs



Ask yo ur c a rrie r if the y ha ve a ppo intme nt with yo ur a tto rne y a lre a dy a nd po ssib le ne g o tia te d ra te tha t wo uld a pply to yo u a s the ir po lic yho lde r



Inc urring c o sts witho ut c o nse nt



Co nse nt to se ttle



No t impa iring sub ro g a tio n rig hts



Co ntra c tua l limita tio ns pe rio d



Arb itra tio n o r o the r a lte rna tive d ispute re so lutio n pro visio ns



Cho ic e o f fo rum/ la w pro visio ns

16

T he Ro le o f Outside Co ve ra g e Co unse l

• I

mpo rta nc e o f invo lving o utside c o ve ra g e c o unse l b e fo re a ny issue s with the c la im a rise

• I

de ntify a nd a ppo int c o ve ra g e c o unse l a nd ha ve the m e ng a g e d in po lic y re vie ws in o rde r to b e tte r ne g o tia te te rms a nd c o nditio ns with the c a rrie rs

–

Also , yo u will ha ve the b e ne fit o f a n a lre a dy-e sta b lishe d re la tio nship with truste d c o unse l to who m yo u c a n turn whe n yo u ne e d he lp with a c la im

• Atte nd we b ina rs a nd wo rksho ps tha t yo ur c o ve ra g e la w firm pro vide s

to b e a b re a st o f the la te st de ve lo pme nts in c o ve ra g e litig a tio n

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T ips fo r Be tte r Co he sio n Be twe e n Risk Ma na g e me nt a nd L e g a l

• Co nside r invo lving in-ho use c o unse l o n the fro nt e nd – whe n yo u’ re

b uying / re ne wing c o ve ra g e – to e nsure tha t RM is se nsitive to the c urre nt risks the Co mpa ny fa c e s a nd c a n purc ha se type s o f c o ve ra g e / limits, a nd ne g o tia te po lic y la ng ua g e , a ppro pria te ly

–

An a d d e d b e ne fit is tha t c o unse l will b e mo re fa milia r with the c o ve ra g e

• RM c a n pro a c tive ly pro vide a hig h le ve l o utline / c he a t she e t re wha t

po lic ie s the Co mpa ny ha s a nd wha t type s o f thing s the y c o ve r.

–

Ma ke sure L e g a l ha s a full sc he d ule o f insura nc e , a nd d o this a nnua lly a fte r re ne wa l – this will he lp a c c o unt fo r ne w c o ve ra g e s, ma te ria l c ha ng e s in c o ve ra g e s, e tc .

• Give pe rio dic tra ining to L

e g a l re g a rding impo rta nt insura nc e c o ve ra g e princ iple s so the y a re se nsitive to tho se issue s

• Se t up inte rna l distrib utio n c ha nne l fo r ne w third-pa rty c la ims/ la wsuits to

e nsure tha t RM le a rns o f the c la ims/ la wsuits imme dia te ly

18

T ips fo r Be tte r Co he sio n Be twe e n Risk Ma na g e me nt a nd L e g a l

• Se t-up inte rna l fo ld e rs/ d rive s to ke e p a ll c la ims-re la te d c o mmunic a tio ns in o ne

pla c e

• Cre a te a te mpla te tha t yo u wa nt to use whe n c o mmunic a ting with inte rna l

pe rso nne l re la te d to the c la im

–

T he te mpla te sho uld inc lude a n “Atto rne y/ Clie nt Privile g e d” he a de r, a nd in-ho use c o unse l sho uld b e inc lude d o n a ll c o mmunic a tio ns inte rna lly in a n e ffo rt to pre se rve privile g e

• Invo lve RM in pre -c lo se d ue d ilig e nc e pro c e ss with M&A te a m fo r a ny stra te g ic

pla nning to ma ke sure a ll tra nsa c tio ns a re pro pe rly re vie we d fo r po te ntia l lia b ilitie s, e spe c ia lly o n “sto c k” d e a ls

–

Impo rta nt to no te tha t a sse t-o nly de a ls sho uld b e re vie we d b y RM po st-c lo se to ma ke sure a ppro pria te c o ve ra g e s a re in pla c e to c o ve r po ssib le ne w e xpo sure s

–

T ra nsa c tio ns sho uld b e re vie we d to de te rmine whe the r po lic ie s, o r c e rta in rig hts unde r po lic ie s, we re tra nsfe rre d in the de a l

• Co nsid e r ha ving a d e d ic a te d in-ho use c o unse l fo r a ny insura nc e -re la te d ma tte rs

–

T ime -pe rmitting , pe rha ps c o unse l c o uld mo nito r insura nc e le g a l d e ve lo pme nts in the sta te (s) mo st re le va nt to yo ur c o mpa ny

19

T ips fo r Be tte r Co he sio n Be twe e n Risk Ma na g e me nt a nd L e g a l

• RM c a n a nd sho uld a sk L

e g a l q ue stio ns g e a re d to wa rd e nsuring tha t a ll po te ntia lly a pplic a b le po lic ie s a re no tic e d a nd pursue d

–

E .g ., in a lo ng -ta il c la im, b e sure to a sk whe n the pla intiff wo rke d a t o r live d ne a r the pla nt, o r in a c o nstruc tio n de fe c t c la im a sk whe the r the re a re a ny a lle g a tio ns o f pro fe ssio na l lia b ility

–

I f yo u ha ve a c yb e r e ve nt tha t yo u ha ve b e e n a ske d to no tic e , ma ke sure yo u kno w the na ture o f the inc ide nt fro m the b e g inning

• E

.g ., whe the r the e ve nt sho uld b e no tic e d unde r a c rime o r spe c ia l c rime po lic y in a dditio n to c yb e r c o ve ra g e

• T

hing s RM g e ne ra lly sho uld a vo id do ing b e fo re disc ussing with L e g a l, if po ssib le :

–

Co mmunic a ting a b o ut a ne w c la im/ lia b ility with o the r no n-la wye rs – b e st pra c tic e wo uld b e to wo rk thro ug h L e g a l so yo u c a n g e t the b e ne fit o f privile g e

–

Co mmunic a ting with insure rs a b o ut a ne w c la im/ lia b ility

• Ma y sa y o r c ha ra c te rize thing s in a wa y to the insure r tha t’ s ha rmful to the c o mpa ny in

the unde rlying c a se b e c a use no t fully se nsitive to the issue s in the unde rlying c a se

Que stions?