21st Century Risks and Their Impact on Insurance in the United States

Steven P. Blonder and Jason Rosenthal of Much Shelist discuss some of the most significant modern issues in the US insurance industry, giving consumers in the market some key advice on how to gain and maintain reliable coverage.

Published on 15 November 2022
Steven Blonder, Expert Focus Contributor, Much Shelist
Steven P. Blonder
Ranked in 1 Practice Area in Chambers USA Guide 2022
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Jason Rosenthal, Expert focus contributor, Much Shelist
Jason Rosenthal

As climate change issues continue to grow, so too will problems like natural disasters, and this will present a lot of different challenges for both insurance companies and policyholders.

In relation to climate-related risks like natural disasters, as well as other novel issues like the COVID-19 pandemic, the best advice is to understand an insurance policy in depth. Simply buying a policy doesn't necessarily provide adequate coverage, and so the risks that are intended to be insured against should be discussed up front. Accurate policy information, as well as legal advice, should be obtained at the earliest moment possible.

As we become more and more digitised and data centric, companies need to keep on top of trying to find new forms of polices, and tailoring their existing policies to the specific data needs of their own business.

Data protection and cybersecurity are areas of rapid and constant development, and it is difficult to keep up with the new forms of hacking and other methods of breaching data, especially as fraudsters become more brazen and sophisticated. As a result, this is an area that requires a high level of attention and effort on the part of policyholders to ensure they remain covered in the event of a breach.

Sometimes, the best insurance is not your own insurance, but insurance that is curated by a business partner, a vendor or some other third party; if that party is performing services on your behalf, you may need to understand whether you have any rights under their policy.

Companies should not underestimate the importance of keeping abreast of the insurance policies of the parties they interact with. For example, it may be especially necessary for a company to be aware of the extent of the coverage of a party that holds key data belonging to that company, as this may not fall within the company's own policy.

Some states have laws that provide strong remedies when an insurer acts in bad faith, but there are other jurisdictions where it is more difficult to prevail.

Lastly, although the likelihood of succeeding in a claim for bad-faith denial of insurance coverage varies considerably from state to state, under most states' laws the insurer can be liable for an amount that exceeds its policy limit where it refuses in bad faith to settle a third-party liability claim.

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