Insurance Coverage & Recovery

In House Warrior: Post-Pandemic Insurance Risks with Larry Goanos & Richard Levick

Larry Goanos, chief executive officer of independent insurance consulting firm, Andros Risk Services, speaks with Richard Levick, chairman of Levick, in this transcribed installment of the In House Warrior Podcast series.

Speaker 1: Welcome to the Corporate Counsel Business Journal's daily podcast, In House Warrior with host, Richard Levick, chairman of Levick, a global crisis and litigation communications firm.

Richard Levick: Good day. This is Richard Levick with In House Warrior, the daily podcast of the Corporate Counsel Business Journal. And with me today is Larry Goanos, who is with Andros Risk Services. Larry, welcome to the show.

Larry Goanos: Thank you, Richard. Happy to be here.

Levick: It's great to have you, and I know you've written two books on insurance. You've served as an expert witness in over 180 cases. Here we are today talking about two general counsels, i.e. in the shadow of the pandemic, companies thinking about going back to work.

What are some of the things that you've seen and you're seeing in terms of that companies need to be thoughtful of from an insurance perspective?

Goanos: Well, it's a great question. Obviously COVID-19 is everywhere and it's going to cause, or has started to cause and will cause an explosion in litigation. I hate to say it, but there's a lot of opportunistic plaintiffs lawyers out there, but there's also a lot of aggrieved businesses who purchased various types of coverage that they thought would respond to something like this. And now they're finding out, not necessarily so.

So the COVID really touches almost every line of coverage from healthcare to employment practices, directors and officers liability, business interruption, general liability. So there's a wide variety of policies. If you're a general counsel, you need to look at all your coverages, and try to think about where you've been harmed and where there might be potential coverage.

But I will also say that each policy turns on its own wording and there's no one standard answer. So, if some law firm approaches you and says, hey, I can guarantee you we're going to get coverage under your GL for all the business that you lost under the business interruption clause. Don't believe them. It's going to be a case by case and it could be drawn out for quite a bit.

Levick: You know, Larry, I think we've made some news here. We've been doing this show for a while and no one's ever used the phrase before, opportunistic plaintiffs lawyers. So we're making, we're making news.

What are you, what do you see in terms of shareholders and boards? Do you see shareholders starting to sue boards on some of these unproperly or not properly preparing for the pandemic, or not properly preparing for the return?

Goanos: Yes, that has started. There are at least five cases that have been filed against boards of directors for not being properly prepared and some policies, and I actually recently did a little research on this. Some policies do have exclusions for pollutants, which can...

So any claim arising out of a pollutant which can include in some versions, viruses specifically. Others just say adverse chemicals and things of that nature that could be sort of pushed into the COVID-19 arena.

But it's going to be difficult because this is sort of a one in a hundred year event. In a way, we had the Spanish flu in 1918, although you could argue, well we've had SARS and MERS, the Asian flu. People should have known.

And there was actually was, a lot of people don't know this, but there actually was a policy available from Munich Re and Marsh starting in November of 2019, that would have covered COVID-19 for business interruption losses, and Munich Re rolled it out. Marsh, I think was the exclusive broker. And it was available from November through January, and then when COVID-19 hit the headlines, they pulled it from the market.

But in those three months that it was available, you know how many policies sold? Zero. But shareholders can argue, hey, you should have known about that, and by the way, they'll be suing their insurance brokers too. You should have known that policy was available and you should have bought it. So it's going to be interesting to see how it all plays out.

Levick: Well, there's a lot of talk and I know one of the insurance coverage magazines talked about just this, which is that there were pandemic policies available and there just weren't a lot of buyers.

Goanos: Correct. Nobody perceived the risk because it's been so long since any kind of pandemic had a significant impact on anyone's business. But now, of course, everybody, 20/20 hindsight, we should've had coverage, and why didn't we?

And so, as I said, a lot of insurance agents have already been getting calls from people saying, we want to sue our agent for not advising us. But should an agent advise you of asteroids that could potentially hit your business, or a sinkhole. There are so many different things. So these are going to be interesting arguments. I'm sure different courts will rule different ways.

Levick: And Larry, I'm going to go back in the archives and see the show you and I did in 1917 and see how well you saw the future then.

What other things are you recommending to companies now, as they look at these kinds of, as you say, once in a hundred year period events?

Goanos: Well, I deal with a lot of law firms in my expert work, hundreds nationwide and both defense and plaintiffs. And I would say, if I'm a general counsel, they're probably getting already I'm sure, contact from various plaintiffs firms and say, hey, let us represent you. We can get coverage for you on this.

I would just caution that they hire or use a firm that's experienced. Nobody's really experienced in COVID-19, but I'm sure there are law firms that have been done other similar things and not a pandemic, but other types of catastrophes.

But just make sure you're hiring a reputable firm with a lot of resources. There are firms that will tell you they can do it. And there's a phrase, a friend of mine, who's a lawyer, I won't say who. But his firm, they have a phrase, "We love to learn while we earn." You don't want external counsel to be paying for a law firm to learn as they earn.

So I would recommend just use a very solid plaintiff firm that has good references for you before you bring them in to show them all your policies and do all those things.

Levick: And Larry, in the last 30 seconds or a minute or so that we have, what are the most significant key takeaways for general counsel who are listening to this and other audience members?

Goanos: I would say, don't necessarily count on an insurance recovery because you may not get one, but also, I wouldn't point the finger necessarily at my broker or my risk manager, because this is so out of the blue. It's not like a hurricane and you're based in Florida and you knew you should have had coverage.

This is really a once in a hundred year event. So unfortunately as a general counsel, it's distasteful and unpleasant to tell your board, hey, we have no recovery here. We're going to have to eat all these losses. That may happen, not necessarily, but it may. So be ready for that, but understand that it just may not be anybody's fault. It's just one of those things that happens.

Levick: Larry, thank you so much. Larry Goanos with Andros Risk Services. I'm Richard Levick for In House Warrior, the daily podcast of the Corporate Counsel Business Journal, and we'll see you tomorrow.

Speaker 1: You've been listening to the Corporate Counsel Business Journal's daily podcast, In House Warrior with host, Richard Levick.

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