Insurance Archeology: What Is It and Why You Will Need It

The eradication of liability statutes is coming to a state near you. States like New York and California were early adopters. Other states are rapidly following suit. With a stroke of a pen, your state can change the statute and potential claims from as far back as the 1950s could be filed today. Due to common record retention policies, technology changes or even fires and floods, tracking down your insurer, policy and limits for decades-old documents can look impossible. This is where insurance archeologists become invaluable.

 

Several state legislatures have recently expanded the rights of sex abuse victims by suspending and extending the statutes of limitation for civil suits alleging childhood sexual abuse. In many states, the recent litigation does not provide immunity for municipalities or school boards, which can now be liable for alleged acts of negligent hiring, supervision and/or retention that led to the sexual abuse against a minor. New York has even passed an Adult Victims Act which provides a window for lawsuits related to past sexual assault and abuse that occurred against adults. In fact, sexual abuse is not the only long-tail liability facing municipalities and school boards.  Environmental liabilities from underground tanks and dumps persist along with emerging claims alleging CTE injuries due to sports related concussions. 

 

A critical tool to respond to claims alleging harm that occurred 20, 30, 40 and more years ago are the occurrence-based general liability and excess liabilities policies purchased in the past. These policies were mostly written on an occurrence basis and the policy for the years of alleged harm respond. Child sexual abuse claims allege acts of negligent hiring, supervision and/or retention, which fall under the bodily injury section of general liability coverage. 

 

Since claims of sexual abuse and other long-tail liability claims often alleged harm over many years and involving multiple plaintiffs, it is a best practice to preserve historic insurance records and to document as many years of historic coverage as possible. Most policyholders do not have this information readily available. Insurance archaeology is a colorful term of art that describes the specialized research techniques to reconstruct these missing insurance policies.  

 

Internal Records

An important source of information is the organization’s historic records. Insurance information can be found in a wide range of records, including accounting files, correspondence, contracts, leases, claims, budgets and litigation. In conducting a search, it is important to keep in mind that even a single document can identify a key policy or a lead to an outside source.

 

Historic records can be stored in a wide range of locations. Some municipalities and school boards have well-organized archives maintained by professional archivists who may be helpful in locating likely record groups, such as those from the business office and legal files. For other policyholders, there may be little to no systematic procedures for records retention. In these cases, the search for missing policies may lead to files in an attic, basement, under the stairs in a school, a sanitation facility or in one memorable instance, in the cells of the former jail. 

 

The minutes of the Board of Education or municipal council can be a particularly important source of information for public entities. Resolutions for the purchase of insurance and discussions of pending litigation can include details regarding insurance coverage. Minutes are also a critical source of information regarding brokers, claims and litigation, which can then be further researched through court records and the records of defense counsel.

 

Tapping Institutional Memory

Much of the detective work in insurance archaeology research involves tapping into human intelligence - what the spy flicks call ‘HUMINT’ - the recollections of former employees, board members, brokers and outside counsel. Interviews often identify carriers, brokers and third parties that received certificates of insurance and information on past claims and litigation.   

 

External Sources

In instances where internal records have been destroyed or searches have been exhausted, there are outside sources that can lead to more policy information.

 

Insurance Carriers

Requests to carriers can be submitted to any primary, excess or workers’ compensation carriers identified in years where policies are missing. It is helpful to ask carriers to search all their records, including applications and underwriting files that could identify prior or subsequent coverage. These requests can also include the records of all affiliated and legacy companies as other relevant liability policies could have been issued by these carriers. Even the records of insolvent carriers are worth pursuing to identify additional solvent coverage or leads to potential outside sources.

 

Former Brokers

Consolidation among insurance brokers has been so extensive that identifying the successors often requires painstaking research. State insurance regulators, historic phone books, Secretary of State filings and even obituaries can provide details to help unravel these complex corporate histories. Records requests can be sent to the successors of each broker. In addition, interviews of the individual brokers that handled the account can also be critical to identifying carriers, contracts that required evidence of insurance, past claims and litigation. 

 

Law Firms

Board counsel often retain records for decades or more and are a key source of information on past insurance. Law firms may have retained records that contain information on insurance coverage, including correspondence, litigation and contracts. The records of defense counsel from litigation are also important as they often contain pertinent information from prior searches for insurance, correspondence with carriers and even copies of policies. 

 

Additional Insureds and Certificate Holders

Since many contracts contain hold harmless and indemnification provisions, it has been a common practice to provide certificates of insurance to meet these contractual requirements.  Such relationships can include use of municipal fields by a Board of Education, rental of ice rinks or state contracts. Records related to the contract that are maintained by the insured itself or the third party could include copies of the certificates of insurance and in some instances copies of policies.

 

Court Research

Policies and secondary evidence of liability insurance may be found in court records in civil cases ranging from trip and falls to auto accidents. Pertinent cases in both state and federal courts can be identified in Westlaw and Lexis searches. Since many courts maintain indices that can be searched by the name of the defendant, requests can be made directly to the courts to identify cases where the organization was a defendant in the years where policies are missing. Court records will identify defense counsel which can be another outside source of information.

 

Preserve the Evidence

Given the enormous costs of defending and settling sexual abuse claims and litigation, time is of the essence in documenting lost policies. The process of notifying insurers of claims and then dealing with the inevitable requests for documentation that follows, can severely tax any organization’s ability to pursue coverage. Unless the policyholder is prepared with full details of all possible coverage, it will be at a disadvantage in negotiating settlements. Having quick access to the details of the policies and scanned images of the records in a consistent format saves critical time when notifying insurers and coordinating information between outside counsel, brokers and consultants.

 

Alliant works with and has vetted some of the top insurance archeology firms in the country. Please reach out to your Alliant representative with questions and recommendations.