Hurricane Ian is the costliest global natural disaster of 2022, several billion dollars in losses expected from recent California storms that caused extreme flooding, and, in Vermont, the Supreme Court brings back a shipbuilder’s claims for physical loss stemming from COVID-19.
California
Several Billion Dollars in Losses Expected From Recent Storms
Another round of ferocious winds, torrential rain and flooding on Jan. 16 represented the ninth atmospheric river in a three-week series of winter storms impacting California. Property losses in California from ongoing storms are expected to run “several billion dollars,” according to state officials. President Joe Biden approved a disaster declaration for the state, and Gov. Gavin Newsom signed an executive order to further bolster the state’s emergency response. California has received rainfall totals 400%-600% above average since Christmas, with some areas receiving 30 inches of rain. There have been 19 deaths attributed to the California storms over the period from Jan. 2 to Jan. 16.—From Mark Friedlander, Insurance Information Institute
Kentucky
No Duty To Defend or Indemnify Distributor in Opioid Lawsuits
Quest Pharmaceuticals, which distributes generic versions of popular drugs, was faced with around 77 lawsuits by cities, counties, and others for its alleged misconduct that contributed to the nationwide opioid crisis. Quest notified its insurers, Westfield National Insurance Co. and Motorists Mutual Insurance Co., which sought declaratory judgments that they were not required to defend or indemnify Quest since the lawsuits did not seek damages “because of bodily injury.” The district court granted summary judgment to the insurers. Quest appealed, and the Sixth Circuit Court of Appeals affirmed the district court’s decision. Applying Kentucky law, the court said, “Nothing in the policies suggests that they were meant to cover lawsuits like the ones here, brought primarily by local governments to recover purely economic damages. The plain language instead indicates that claims must in some way derive from a particular bodily injury to a person.” Because there is no duty to defend, the court added, there is also no duty to indemnify.—From Senior Managing Editor Phil Gusman
Florida
Hurricane Ian Costliest Global Natural Disaster of 2022
Hurricane Ian was the costliest natural disaster of 2022 with $100 billion in losses, of which about $60 billion was insured (not including NFIP losses), according to a recent report on natural disaster figures from Munich Re. Ian, which struck Florida’s west coast in September, was the second-costliest tropical cyclone on record—behind 2005’s Hurricane Katrina—when adjusted for inflation. Only four other storms were stronger when making U.S. landfall. Severe flooding in Pakistan in August was the second overall costliest disaster of 2022, although flooding in Australia in February and March was the second costliest event for insurers, Munich Re says. Overall losses for the year were around $270 billion, down from $320 billion a year ago. Insured losses were around $120 billion, unchanged from 2021. Munich Re says storms like Ian fit in with the anticipated consequences of climate change, where tropical cyclones will not necessarily be more plentiful, but will be more severe with heavier rainfall.—From Senior Managing Editor Phil Gusman
Pennsylvania
Statute of Repose Not Tolled by Repairs
In Venema v. Moser Builders, Inc., Moser Builders built the subject home—located in Chester Springs, Pennsylvania—in 2003, and in October 2004 the house was purchased by appellants from the original third party owners. In August 2019, appellants filed a complaint against Moser alleging construction defects and that, despite several inspections and repairs by Moser during the period from 2004 to 2008, the defects were never properly remedied. Moser argued appellants’ case was barred by the Statute of Repose because in excess of 12 years had passed from the construction completion date. Appellants asserted that, as ongoing repairs took place from 2004 to 2008, these repairs should effectively suspend the running of the clock on the Statute of Repose. The Superior Court affirmed the trial court’s determination that the appellants’ claims were barred by the running of the Statute of Repose and that their window for bringing a claim has closed. Appellants’ assertion was not supported by any legal authority.—From CLM Member Andrew S. Kessler, Wood Smith Henning & Berman
New York
Cumulative Impacts Environmental Bill Signed
On the final day of 2022, New York Gov. Kathy Hochul signed into law the Cumulative Impacts Bill (CIB), which both houses of New York State’s legislature had passed eight months earlier. The legislation amends New York’s Environmental Quality Review Act by now requiring the state to consider, during its permitting approval and renewal processes, an analysis of the “cumulative impacts” on overburdened communities that could result over time from the introduction or expansion of facilities that are potential sources of pollution and other public health hazards. Although we have yet to learn exactly how the law will be implemented, a determination that regulators will make prior to the law taking effect in late 2023, CIB does seem to add another bureaucratic hurdle for developers, which will likely increase the amount of time and costs that go into development projects. Supporters say such investment is worth it because it will help course correct the wrongs perpetrated on environmental justice communities by ensuring a new standard.—From CLM Member Karen Cullinane, Goldberg Segalla
Vermont
Supreme Court Revives COVID-19 Coverage Claims
Military shipbuilder Huntington Ingalls Industries purchased an “all risk” property insurance policy in March 2020 from its insurance subsidiary, Huntington Ingalls Industries Risk Management, LLC, which in turn purchased policies from multiple reinsurers. When thousands of employees were infected with COVID-19, Huntington sought coverage under the reinsurance policies for property damages, business interruption, and other losses, but coverage was denied. In Huntington Ingalls Indus., Inc. et al. v. Ace American Ins. Co. et al., the Vermont Superior Court concluded Huntington failed to allege facts to support a viable claim for coverage and entered judgment in favor of the reinsurers. The Supreme Court, though, said the key issues to decide were the interpretation of the phrase “direct physical loss or damage to property” and whether plaintiffs’ facts were sufficient to state a claim for physical loss or damage. The court found plaintiffs sufficiently alleged a claim that, if proven before a trier of fact, would demonstrate coverage under the policy.—From CLM Member Crystal Alonso, Callahan & Fusco