#BreakingTheBias – Breaking Bias through allyship
In our final Legalign Global video celebrating International Women’s Day, we hear from Celena Mayo, Ryan Howe and Scott Macoun on breaking bias through allyship, the power of mentoring and the role that men can play to create a gender equal future
In an order dated December 15, 2020, a California federal court found in favor of an insurance broker, dismissing a professional negligence claim whereby the plaintiffs alleged that the broker failed to procure business interruption coverage sufficient to cover business interruption losses arising from COVID-19.
On June 26, 2020, the plaintiffs, entities that provide rehabilitative and medical-surgical services, filed a complaint in California state court against an insurer and an insurance broker. The Complaint alleged that the insurer breached its business interruption insurance policy with the plaintiffs by denying them coverage for losses caused by the COVID-19 pandemic. In addition, the Complaint alleged a negligence cause of action against the broker that sold the plaintiffs the policy for failing to obtain appropriate coverage, failing to accurately represent and report the coverage obtained, and failing to properly warn the plaintiffs of potential coverage limitations, gaps or exclusions.
On August 26, 2020, the defendants removed the action, asserting that the court had diversity jurisdiction because the plaintiffs were all citizens of California, the insurer was a citizen of Connecticut, and, while the broker also was a citizen of California, the defendants asserted that the broker was fraudulently joined and so its citizenship should not be considered. The plaintiffs moved to remand, contending that the broker was not a sham defendant.
The insurer argued that the plaintiffs could not establish a cause of action for negligence against the broker because in California an insurance agent ordinarily only has an “obligation to use reasonable care, diligence, and judgment in procuring the insurance requested by an insured.” The insurer further argued that none of the exceptions applied that would give rise to a heightened duty of care.
Conversely, the plaintiffs argued that three exceptions applied that created a heightened duty of care owed by the broker. The plaintiffs reasoned that while insurance agents generally do not have “a duty to volunteer to an insured that the latter should procure additional or different insurance coverage,” that rule does not apply when (1) the agent misrepresents the nature, extent or scope of the coverage being offered or provided; (2) there is a request or inquiry by the insured for a particular type or extent of coverage; or (3) the agent assumes an additional duty either by express agreement or by “holding himself out” as having expertise in a given field of insurance being sought by the insured. The plaintiffs argued that all three exceptions were applicable.
The court held that the broker was not negligent because none of the exceptions applied. Specifically, the court ruled that (1) a broker warranting that the plaintiffs would receive “full and adequate insurance” is a generalized statement that is insufficient to amount to a misrepresentation that would trigger a heightened duty; (2) the broker did not have an affirmative duty to warn of potential coverage gaps or exclusions absent a specific inquiry; and (3) the broker was not “holding out” as having expertise when it discussed business interruption coverage on the broker’s website.
The court ruled that since none of the exceptions to the general rule applied, the plaintiffs could not prevail on their negligence claim against the broker. The court therefore dismissed the negligence claim against the broker and denied the plaintiffs’ motion for remand, as removal based on diversity jurisdiction was proper.
In one of the first decisions in the country with respect to insurers’ obligations to their insureds for COVID-19 claims in the context of commercial liability coverage, one court has found a duty to defend under a commercial general liability (CGL) policy. In McDonald’s Corp., et al. v. Austin Mutual Insurance Company, 1:20-cv-05057, the federal district court held that a claim for injunctive relief requiring McDonald’s to enact more stringent safety protocols and provide additional training to franchisees and their employees on preventative measures to avoid the spread of COVID-19, constituted a claim for “‘damages’ because of ‘bodily injury’” triggering a defense obligation.
On May 19, 2020, five employees of two Chicago McDonald’s franchises, along with four of their live-in family members, filed a lawsuit against several McDonald’s entities and the two local franchisees (collectively “McDonald’s” or “Insureds”) styled as Massey, et al. v. McDonald’s Corp, et al., Case No. 2020CH04247 in Cook County, Illinois (the Massey suit).
The Massey suit alleges that the Insureds are liable for remaining open during the pandemic without additional protections. Three of the underlying plaintiffs contracted COVID-19 or were sick with symptoms consistent with COVID-19. The Massey lawsuit alleges the plaintiffs and other employees are vulnerable to bodily injury because they risk exposure to the disease because of their unsafe work environment. The Massey suit further alleges that the lack of protections harms the public because an infected employee or customer is likely to spread COVID-19 to others since it is highly contagious. The Massey suit seeks an injunction requiring McDonald’s to supply workers with additional protective equipment, enforce policies for mask wearing by employees and customers, monitor infections and alert workers to possible exposure, and provide additional training on preventative measures to stop the spread of COVID-19.
Importantly, the Massey suit did not seek any monetary or compensatory damages, and none of the Massey plaintiffs specifically allege that they contracted COVID-19 at the Insureds’ premises. In June 2020, the underlying state court agreed and granted the preliminary injunction in part, requiring McDonald’s and the franchisees to provide workers at multiple locations with additional social distancing training and mask enforcement procedures.
The Insureds sought coverage under two Business Owner policies issued by Austin Mutual Insurance Company, but Austin Mutual denied coverage. The Insureds filed their coverage action seeking declaratory judgement that Austin Mutual owed a duty to defend the Massey suit and alleging breach of contract, seeking more than $1.5 million in defense costs as of the time of filing. The Insureds also alleged bad faith under section 155 of the Illinois Insurance Code seeking their costs and attorneys’ fees in the coverage action. Austin Mutual moved to dismiss the entire complaint for failure to state a claim on the basis that the underlying claim for injunctive relief did not state a claim for “damages because of ‘bodily injury,’” as those terms are used in the policy.
Holding of the Court
In denying Austin Mutual’s motion to dismiss, the Court held that the underlying Massey suit at least potentially alleged “damages because of ‘bodily injury’” sufficient to trigger a defense obligation. The Court held that the costs to comply with the mandatory injunction are “damages” for purposes of a liability policy. The Court reasoned that the Massey suit was seeking damages because it required the Insureds to spend money to comply with the mandatory injunction to remediate the “continuous and ongoing exposure” to the virus.
Illinois courts generally interpret the phrase “because of bodily injury” much more broadly than policies that provide coverage “for bodily injury.” Consequently, the Court held that “but for” causation is sufficient to trigger coverage, and that “but for” the Massey plaintiffs’ contraction of COVID-19, the insureds would not have incurred “damages” to comply with the injunction. Of note, in adopting this expansive “but for” reading, the Court relied on Cincinnati Ins. Co. v. H.D. Smith, L.L.C., 829 F.3d 771 (7th Cir. 2016), wherein the Seventh Circuit reasoned that the state of West Virginia’s suit to recover costs to address its opioid epidemic triggered coverage, as some of those costs were “because of bodily injury” to its citizens, even though West Virginia did not incur “bodily injury.”
The Court further held that the Massey suit alleged “bodily injury” since three of the Massey plaintiffs alleged that they contracted COVID-19 and/or became sick. While the Court held that this alone was sufficient, the Court further found a second “bodily injury” claim based on exposure to the virus relying on certain cases under Illinois law, “exposure to potentially harmful contaminants [can] constitute bodily injury even without the manifestation of sickness or disease.”
The Court acknowledged it was a “close call” and the Insureds’ “weakest” point is how the mandatory injunction would remediate the “bodily injury” from the employees that had already been sick. However, the Court found that the injunctive relief sought, i.e., the protective measures, would decrease the risk of “bodily injury” from exposure to the virus. While noting that Austin Mutual may have the better interpretation, the Court found there was at least the potential for coverage to trigger a defense under the broad duty to defend standard. Finally, the Court noted approvingly of the Insureds’ argument that had Austin Mutual intended to exclude “bodily injury” due to a virus, it could have included a specific virus exclusion but failed to do so.
Although Austin Mutual also moved to dismiss the section 155 claim for bad faith, this was not addressed in the Court’s opinion. In Illinois, no bad faith claim can be asserted where there is a bona fide dispute concerning coverage; a mere incorrect denial is insufficient. Given the Court’s comments that it was a “close” call, it is surprising the Court did not dismiss or at least address the bad faith claim.
The Court’s holding is not without issues and the decision is not necessarily outcome determinative on future claims. The Court is embracing an extremely broad interpretation of the phrase “because of ‘bodily injury,’” and one that is far from universally accepted across other jurisdictions. The opinion is unclear as to whether actual exposure must be part of the allegations in order to trigger coverage. Further, although the Court stated that the claim for injunctive relief triggered the duty to defend, the ruling is only in the context of denying a motion to dismiss for failure to state a claim, not summary judgment. Perhaps most importantly, the Court declined to address potentially relevant exclusions, finding that such arguments, having not been raised by Austin Mutual in its initial briefing, were waived. The Court’s decision, as such, does not forestall arguments that exclusions may apply to bar coverage, and the Court suggests that a virus exclusion in a liability policy could support a denial of coverage.
Given the circumstances, and the potentially broad impact this decision could have on COVID-19 coverage, it will not be surprising if Austin Mutual seeks to appeal the decision. The question, however, is when an appeal may rise. As noted above, this is not a final order, though Austin Mutual may have an option for an interlocutory appeal. Although not yet decided in the Seventh Circuit, several other circuits have found trial court orders requiring an insurer to defend an insured are immediately appealable injunctions under 28 U.S.C §1292(a)(1). This will continue to be a case to watch closely.
Since this is one of the first decisions concerning the duty to defend insureds for COVID-19 claims under a CGL policy, insurers should be aware of the Court’s holding. Insurers should anticipate policyholders attempting to expand the scope of “‘damages’ because of ‘bodily injury’” in Illinois and other jurisdictions going forward. The opinion also has implications far beyond COVID-19 claims under commercial general liability policies, and this broad interpretation may apply with respect to other claims seeking injunctive relief and the opioid litigation in the Seventh Circuit as anticipated by Cincinnati Ins. Co.
Like the opening bell on the trading floor of the Stock Exchange, the reintroduction in Congress last week of the long-awaited Secure and Fair Enforcement (SAFE) Banking Act and related Clarifying Law Around Insurance of Marijuana (CLAIM) Act was a call to action for carriers and insurance brokers across the country. Together, the bills create a legal safe harbor for providing financial and insurance services to cannabis-related businesses. If passed, these bills will be a game-changer for banks and insurance companies that wish to engage with plant-touching cannabis businesses and the multitudes of ancillary service providers that support the cannabis industry. Below, we describe how this pending legislation may impact the existing and future cannabis insurance industry and certain types of cannabis-related risks.
The Current U.S. Cannabis Insurance Market
There are upwards of 30 surplus lines carriers and several managing general underwriters that currently service the cannabis industry across many lines of coverage. There also is a small handful of admitted carriers that operate in California, and most recently in Arizona. The market capacity for property, commercial general liability, product liability and workers’ compensation coverage has expanded to the extent that it is now relatively easy for most licensed cannabis operators to find multiple coverage options. Those policies nevertheless remain more expensive than policies purchased by similarly situated companies in other markets. Other cannabis coverages have shown steady improvement, such as auto, pollution, indoor crop, crime and fidelity. Locating adequate excess insurance limits remains a problem for the larger cannabis verticals, though this, too, is steadily improving. Available and affordable options remain limited for the specialty coverages of directors and officers (D&O), errors and omissions (E&O) and cyber – those markets remain fragmented and unduly expensive.
Most large commercial insurance carriers – and particularly those that are publicly traded – remain hesitant to offer cannabis-related coverage due to ongoing fear of federal illegality. Concerns over reputational risk, meanwhile, have largely evaporated with increasing social acceptance of cannabis across age groups and political affiliations. We point out, however, that it is becoming increasingly difficult for carriers to verify that they have no “cannabis risks” on the books due to the thousands of ancillary companies that provide products and services to the cannabis industry.
The Forces that Have Paved the Way for Cannabis Insurers
Several developments have helped to speed the growth of the cannabis insurance industry over the past few years. Legalization in Canada paved the way for international insurance markets – most notably the London market – to enter (or re-enter) the space, and provided a means for developing the underwriting skills and metrics needed for eventually entering the riskier U.S. market. The 2018 Farm Bill likewise provided a pathway for carriers to enter the space by insuring what they have perceived as less-risky hemp and hemp-derived products, including CBD (cannabidiol). [Incidentally, we disagree that unregulated hemp-derived CBD is less risky to insure than regulated THC marijuana, but that’s a subject for another time…]
The cannabis insurance industry also has benefited from market forces and hindsight with the passage of time. Under the current and past two administrations (and despite early fears that federal enforcement would increase under the Trump Administration), the federal government has exhibited no interest in prosecuting plant-touching or ancillary companies engaged in state-compliant commercial marijuana activity. Relative to the insurance industry in particular, there has been no reported federal action taken to date against any insurance company or broker that works with state-compliant marijuana businesses.
The 2020 election created a significant shift that furthered the momentum toward cannabis reform at the federal and state levels. In addition to Democrats winning the presidency and controlling both chambers of Congress, five states passed ballot initiatives to legalize adult-use marijuana and medical marijuana. This included voter initiatives in Arizona, Mississippi, Montana, New Jersey and South Dakota, bringing the total number of medical marijuana states to 35 and adult use states to 15. One in three Americans now lives in a state where recreational marijuana use is legal. One should expect a further “domino effect” as 2021 progresses, with new adult-use legislation moving forward in multiple states in the Northeast, Mid-Atlantic and Upper Midwest regions.
Nothing so far, however, has the potential to “juice the market” like passage of the SAFE Banking and CLAIM acts, so now we turn our attention to the details of these two bills.
SAFE Banking Act
The SAFE Banking Act, reintroduced in 2021, was first introduced in March 2019 and has been passed by the U.S. House three times, most recently in September 2019. No Senate floor vote was allowed, however, prior to the recent change in control of the Senate. With bipartisan support and recent endorsements by the American Bankers Association, the Credit Union National Association and others, prospects for passage in the Senate appear good.
The bill creates a safe harbor for depository institutions, including banks and credit unions, to the extent they would not be liable or subject to federal forfeiture action for providing financial services to a cannabis-related business. Key protections of the bill include prohibiting a federal banking regulator from:
- Terminating or limiting the deposit insurance or share insurance of a depository institution solely because the institution provides financial services to a cannabis-related business
- Prohibiting or otherwise discouraging a depository institution from offering financial services to such a business
- Recommending, incentivizing or encouraging a depository institution not to offer financial services to an account holder solely because the account holder is affiliated with such a business
- Taking any adverse or corrective supervisory action on a loan made to a person solely because the person either owns such a business or owns real estate or equipment leased to such a business.
The SAFE Banking Act further prevents regulators from taking a corrective supervisory action on a loan made to a person or entity solely because the loan is affiliated with a cannabis-related business. Loans designed for leasing real estate and equipment to cannabis businesses are explicitly protected. The bill also prevents financial regulators from incentivizing banks not to offer services to accountholders solely because they are affiliated with a legitimate cannabis-related business.
New Federal Guidance Expected
If SAFE Banking passes, one should expect new federal guidelines for banks and other financial institutions about how to work lawfully with legal cannabis businesses. The bill directs the Secretary of the Treasury to ensure that new Financial Crimes Enforcement Network (FinCEN) guidance is consistent with the purpose and intent of the SAFE Banking Act.
The CLAIM Act was reintroduced in mid-March 2021 to coincide with the reintroduction of the SAFE Banking Act. It will “create a safe harbor for insurers engaging in the business of insurance in connection with a cannabis-related legitimate business, and for other purposes.” If passed, the CLAIM Act is expected to open the insurance market to more competition, provide greater capacity, assist with lower premiums and entice new markets for hard-to-place risks such as D&O coverage and other specialty policies. It also will likely reinvigorate an anemic cannabis reinsurance market. In addition, the legislation will ensure that ancillary businesses supporting the cannabis industry, such as landlords, security, technology vendors, design professionals, legal and accounting, may continue to offer products and services without fear of losing their insurance.
The CLAIM Act will:
- Prohibit penalizing or discouraging an insurer from providing coverage to a state-sanctioned and regulated cannabis business, or an associated business
- Prohibit the termination or limitation of an insurer’s policies solely because the insurer has engaged in the business of insurance in connection with a cannabis-related business
- Prohibit recommending, incentivizing or encouraging an insurer not to engage in the business of insurance in connection with a policyholder, or downgrade or cancel the insurance offered to a cannabis or cannabis-related business
- Prohibit the federal government from taking any adverse or corrective supervisory action on a policy issued to (1) an owner or operator of a cannabis-related business or (2) real estate or equipment that is leased to a cannabis-related business, solely because the owner or operator is engaged with a cannabis or cannabis-related business
- Protect employees of an insurer from any liability solely for engaging in the business of insurance with a cannabis or cannabis-related business.
New language in the legislation expands the definitions of “cannabis-related business” and “financial services.” The bill will protect any financial service relating to cannabis, including such services as retirement plans and exchange-traded funds, as well as real estate and ancillary services. Financial payments “made by any means” are protected, such as through credit cards and electronic funds transfers.
The CLAIM Act also includes a requirement that the Government Accountability Office (GAO) will study and issue a report on “barriers to marketplace entry, including in the licensing process, and the access to financial services for potential and existing minority-owned and women-owned cannabis-related legitimate businesses.”
Senator Bob Menendez (D-NJ), co-sponsor of the bill, believes the legislation is badly needed in his state: “The voters in New Jersey spoke loud and clear this November when they overwhelmingly approved of recreational marijuana use, the governor and state legislature have acted, and now it’s time for the federal government to take the shackles off of state-authorized cannabis businesses, allowing this burgeoning industry to thrive.” He added that the legislation “simply levels the playing field for legal cannabis businesses, allowing them to fully operate just as any other legal small business would by permitting insurance companies to provide coverage to these enterprises without risk of federal prosecution or other unintended consequences.”
Senator Rand Paul (R-KY), another co-sponsor, agrees: “The states are making their own decisions on these issues, and it’s time for the federal government to accept that,” he said.
Although the multibillion-dollar legal marijuana industry has thrived despite federal illegality, banking and insurance reform is badly needed to normalize the business operations of cannabis companies and to provide protections against the theft and violence attendant with a cash-heavy industry. It is easy to see how cannabis businesses will benefit from more competition among insurers through lower premiums, higher limits and more choice in specialty coverages. Although the benefits to the insurance industry are more nuanced, the reforms should result in reducing the frequency and severity of cannabis-related insurance claims and losses in ways both predicable and less obvious.
D&O and Other Management Liability
The SAFE Banking and CLAIM acts should have a meaningful impact, for example, on the factors that have prevented carriers from underwriting cannabis D&O and other management liability policies. Because traditional financing options are unavailable to cannabis companies, most have instead obtained capital through the use of private investment, foreign exchanges, an IPO or a reverse takeover of an existing public company, primarily in Canada to date. Given the quickly evolving dynamics of the cannabis industry, however, disclosure of risks to investors through private placement memoranda or other means can be a significant challenge. Cannabis operators are confronted with a regulatory minefield, and some even have been tempted to violate state regulations as they weigh strict compliance versus growth with only limited sources of new capital available.
These perceived omissions and outright regulatory violations have given rise to substantial management liability exposure that to date has been largely uninsured or underinsured. As the losses pile up and insurers retreat from the market, cannabis companies wishing to attract badly needed talent cannot locate the insurance coverage demanded by would-be directors and officers. This dynamic has led to a predictably vicious cycle of management errors, claims, losses, insurance premium hikes, policy renewal declinations and carriers exiting the market. The pending legislation, however, may serve as a “reset” button of sorts to allow the beginnings of a new virtuous cycle for this important insurance coverage.
Theft Losses, Crime and Fidelity Coverage
Theft of cash experienced by cannabis retailers, distributors and other operators has become one of the most common cannabis-related insurance claims. Depending on whether the theft is committed by a third party or an employee, these claims have triggered property, crime and fidelity coverages.
Business Disputes and Litigation
Cannabis business disputes that are predicated on cash payments and associated accounting errors have resulted in substantial litigation that could have been avoided with access to banking and other financial services.
The majority of cannabis product-related claims and lawsuits have been the result of contamination and label and testing failures. Banking and insurance reforms should help pave the way for important new players such as large food safety laboratories and established manufacturing professionals to enter the space and provide improved quality assurance with a corresponding reduction in product recalls, label suits and consumer class actions.
Captives and Risk Retention Groups
Several factors make the cannabis industry attractive for insurance captives and risk retention groups. It is a highly regulated industry where companies must silo their operations in an environment of limited and expensive insurance coverage. Up to now, few cannabis captives have been formed due to fundamental problems − states have refused to domicile cannabis captives, and there has been a lack of fronting carriers and reinsurance. All of these barriers largely have been lifted, with several states and offshore jurisdictions now domiciling cannabis captives, and an increased availability of fronting paper and reinsurance. The passage of the SAFE Banking and CLAIM acts should assuage any remaining concerns by regulators who are asked to approve cannabis captives and risk retention groups, and by cannabis companies looking at a potential offshore captive domicile.
The Bell Is About to Ring
The cannabis market is not slowing down in the United States or globally. Recent forecasts have U.S. sales reaching $41.3 billion within five years at a compound annual growth rate of 15 percent. To safely accommodate public demand, this industry needs stability with access to the full suite of risk management tools available to other market sectors. In the absence of broad federal legalization, partial normalization through banking and insurance protections is good for cannabis companies, their insurers and the millions of consumers who have embraced regulated cannabis products. Insurers should be ready to move when the bell rings!
Wotton + Kearney has appointed James Clohesy, a highly regarded insurance liability specialist, as Special Counsel in its Sydney office. James is known for his excellent work in advising on property and construction third party claims, as well as intentional torts, general and product liability matters.
James, who will be joined by two more colleagues from Sparke Helmore, Jesse Pereira and Laura O’Toole, said: “I’m excited to be joining Wotton + Kearney. I’ve been really impressed by the calibre of the liability team, its collaborative approach to achieving outcomes for its clients and the firm’s People First culture.”
James is known for his work in the energy, construction, government and infrastructure sectors and his ability to clearly and quickly identify key issues. He has also achieved significant success in pursuing recovery actions for his clients.
Charles Simon, leader of W+K’s General Liability practice commented: “James is an outstanding addition to our rapidly growing team. Our growth story is driven by our ongoing desire to ensure we always have the best lawyers available to provide outstanding service to our clients. James’s expertise, combined with that of our wider national liability team, will ensure Wotton + Kearney continues to respond to the needs of the insurance market. We’ll be announcing more senior appointments joining our national liability team in the coming months.”
You can view James’s profile here.
Four insurance leaders in Australia have joined the inaugural CEO Skydive, an initiative that aims to raise funds for mental health research and programs that reduce the incidence of mental illness and suicide.
Organised by not-for-profit Black Dog Institute (BDI), the event saw 15 bosses skydive with Experience Co on April 30 in Wollongong for the benefit of mental health research – with the total funds reaching an impressive $200,000.
James Baum (Aon), Damien Coates (DUAL), Stefan Feldmann (HDI Global), and David Kearney (Wotton + Kearney) were part of the group of CEOs who skydived – with their jumps recorded or live streamed so that loved ones, co-workers, and friends could watch from home.
Kearney commented that the experience took him and the other bosses out of their comfort zone, adding: “It was worth it because it gave us the platform to raise awareness about mental health issues and raise funds for the Black Dog Institute.”
Coates, a BDI mental health ambassador, added: “This was an exhilarating experience for all of us. I’m so proud that of the 15 CEOs who skydived, four were from the insurance industry. It shows just how important we consider the issues of mental health.”
BDI is a clinical organisation that focuses on diagnosing, preventing, and treating mood disorders, such as depression and bipolar.
Despite swearing that he would never skydive, Baum still joined other leaders in the mental health initiative. He summed up the experience, saying: “It’s hard to choose another word other than ‘exhilarating’. I wasn’t quite sure when we got in that plane but once we edged out of that door it was amazing. I really want to thank everyone for supporting the Black Dog Institute to do what they do.”
Speaking about Aon’s relationship with BDI, Baum told Insurance Business: “We provide funding to the Black Dog Institute on an ongoing and annual basis as they’re our charitable partner. So, this event is in addition to what we would normally do with them.
“Also, the Black Dog Institute is a little bit different from other mental health organisations as they’re a clinical organisation and they do clinical studies. So, we do a lot of focus groups with them as well, which is really helpful for them. They come in and talk to our colleagues about their experiences, and we’re more than happy to provide time for BDI.”
Feldmann added: “It was unreal to be jumping out of a plane and falling through the clouds, which makes you realise just how fast you fall. I also want to thank everyone for their words of encouragement and support.”
A team of highly regarded insurance lawyers is set to join Wotton + Kearney’s pre-eminent Property, Construction and Energy team from Sparke Helmore. The team includes partner Wes Rose, special counsel Anthony Mangafas, senior associates Marnie Hasler and James Sutherland, and associates Dena Patterson, Ryan Owens and Tshering Lama.
“Our Property, Construction and Energy team has been very busy in the specialist sectors that have been boosted by huge public and private investment in construction and infrastructure over the last decade. With the infrastructure investment commitments made by state and federal governments, we expect that demand will continue over the next 5-10 years. By growing our market-leading team we can augment our current offering and respond to our clients’ immediate and future needs,” said firm Chief Executive Partner David Kearney. “With the group led by Adam Chylek, our now six partner strong team offers the regional and local insurance market unrivalled depth and expertise across the Power Gen, Mining, Gas, Rail, Construction & Infrastructure, Renewables and Commercial and Industrial Property sectors.”
Adam Chylek, W+K’s Property, Construction and Energy Leader, added: “We are really excited about Wes joining us next week and his team following shortly afterward. We’ve worked with and against Wes and his team over many years and he has an excellent reputation with local institutional and niche insurers, the London market and self-insured engineering firms, and he is well-known to many of Wotton + Kearney’s key clients.”
Wes Rose is market-recognised for his expertise in construction, property and energy and ability to quickly identify factual and technical issues. He combines exceptional legal insight with hands-on industry experience, which he gained earlier in his career as a site manager. Wes advises on coverage, defence and recoveries across construction, engineering, power generation, manufacturing, distribution and agriculture sectors.
The decision to move to Wotton + Kearney with his team was an easy one for Wes. “Wotton + Kearney’s sole focus on insurance law means it has absolute clarity in its vision and strategy, this coupled with its progressive business structure, collaborative culture driven by genuine industry leaders means that it is the best place for me and my team to assist our clients in what are unusual and challenging times. Joining Wotton + Kearney means the Property, Construction and Energy team is now unrivalled in the region in terms of size and depth of talent and that’s great news for our clients. To be part of putting this together and building on it in the years to come is a once in a career opportunity.” he said.
You can view their full profiles at the links below.
Wes Rose – Partner
Anthony Mangafas – Special Counsel
Marnie Hasler – Senior Associate
James Sutherland – Senior Associate
Wotton + Kearney has again joined forces with ANZIIF, Liberty Specialty Markets and SURA to investigate how experiences of workplace inclusion are affecting the insurance industry. This year, more than 600 respondents shared their views on inclusion to help inform the final report Local Voice, Global Impact: Deep Dive on Inclusion Survey 2020 which was launched during September’s Dive In Festival.
The report is written by Dr Jennifer Whelan, Director of Psynapse Psychometrics, a leading Australian expert on inclusion. It highlights that inclusion remains an important issue for the insurance industry, particularly given the broader work-related challenges we have all faced during the pandemic.
2020 has brought unprecedented global disruption with the emergence of COVID-19. Most countries have experienced some degree of lockdown restrictions and prolonged social isolation requirements. As a result, vast numbers of employees have experienced a radical shift in the way they work, from being mostly office-based to working remotely or from home. For many of us, these remain ongoing challenges as we adapt to what may well become a ‘new normal’. This year’s Dive In Festival theme of “Local Voice, Global Impact” perfectly reflects the challenges of tackling a global challenge, while being largely confined to our homes and physically distant from colleagues, family and friends.
In 2019, we took a deep dive into how inclusion is experienced by diverse people working in the insurance and risk industry. In line with broader research, we found that some people feel more included than others; men, older people, leaders, and people who can do some or all of their work remotely feel a stronger sense of inclusion than others. The results from 2019 provided an important first look at inclusion in the insurance and risk industry in Australia and the first industry-based benchmarks on inclusion.
Our aim for the 2020 survey was twofold. Firstly, to explore changes in inclusion over time, with the hope of seeing a positive impact as more and more organisations invest in building a more inclusive culture. Data on the representation of diverse people in the industry is still lacking, but we do know that capability-building and training around inclusion have become more widespread. While the original hope was to find evidence of improvements in inclusion, the COVID-19 pandemic has had such profound and largely negative impact on every aspect of life – ranging from our mental and physical health, our job and economic security, our family and social relationships. As a result, the results from this year’s study are unlikely to be comparable to previous (or future) years. 2020 will go down in history as an atypical year by any measure.
However, COVID-19 has presented an invaluable opportunity to look at how workplaces adapt during a crisis, and the work-related challenges posed by the global pandemic play directly into inclusion. There are two good reasons to expect that many of the impacts of COVID-19 would represent a challenge to how included and connected people feel at work. Firstly, mainstreaming flexible work practices has been a common goal in diversity and inclusion work, and COVID-19 has ushered in an unprecedented era in which many, if not most employees carry out all or most of their work remotely. For most people, this has meant working from home much or all of the time. Secondly, given that many people believe that inclusion can act as a protective factor against change and disruption, and especially for diverse people, exploring experiences of inclusion during this crisis is particularly useful.
You can view a full copy of the report here.
Australasian Lawyer and Insurance Business have rated Wotton + Kearney in their inaugural list of “5-Star Insurance Law Firms and Lawyers”. The firm was declared a 5-Star Excellence Awardee in the field of insurance law based on the feedback of insurance companies, professionals and lawyers about our work quality, specialist expertise and client service quality. Congratulations also go to Chief Executive Partner David Kearney, Brisbane Partner Raisa Conchin and Melbourne Partner Cain Jackson who were rated as “5-Star Insurance Lawyers”.
Read more here.
Wotton + Kearney has been awarded a “Diversity Initiative of the Year” Excellence Award as part of the Australasian Law Awards 2021. The award recognises the firm’s W+K FLEX initiative which offers flexibility for all staff, for any reason.
W+K FLEX was created by rethinking the role of the office in a post-COVID world with the firm’s Chief Executive Partner David Kearney asking all staff the question: “Having experienced flexible working, and putting COVID and public transport concerns to one side, what is your ideal future mix of remote and office working to service your clients, collaborate with your team and integrate your work and personal commitments?”
The firm’s People + Culture team then spent 1:1 time with staff to hear responses, discovering that everyone expected ongoing autonomy and flexibility to do their job in the post pandemic era. They then leveraged tools and infrastructure as part of W+K’s ‘People First’ culture to develop W+K FLEX. The initiative is supported by four key elements: the firm’s vision and guiding principles; ongoing value of office attendance; leadership support; and continuous feedback.
Since implementing W+K FLEX, key learnings discovered by the firm include that:
- office presence doesn’t necessarily mean productivity, and flexibility doesn’t mean working less – the firm has grown by 20% in the FY21 year to date
- remote client meetings are still productive and don’t compromise quality of work
- if you empower people and trust them, they can be as (if not more) productive out of the office as they are in it
- an empowered workforce translates into greater employee loyalty, wellbeing and engagement
- allowing everyone to choose how they integrate work and personal responsibilities builds inclusion
- a flexible workplace reduces the need for additional office space
- a flexible employee base enables a scalable workforce across geographic regions, boosting access to diverse talent, and
- universal flexibility aligns more closely with clients, most of whom were proponents of flexibility well before COVID.
The notion that “work is a thing you do, not a place you go” is a central tenet of the future of work and the philosophy behind W+K FLEX, which now enables universal access to flexibility for all W+K staff in the firm’s hybrid virtual workplace.
The full Australasian Law Awards 2021 winners will be announced 15-17 June.
International law firm DAC Beachcroft is delighted to announce it has been appointed to Zurich Insurance Group (Zurich)’s new large and complex claims legal panel for the Asia-Pacific (APAC) region, further consolidating its long-standing relationship with one of its largest and closest global insurance clients.
The appointment follows a successful proposition submitted jointly with leading Asia-Pacific insurance law firm Wotton + Kearney in Australia and New Zealand with whom DACB has worked closely for several years. Both firms are founding members of Legalign Global, an alliance of five best-in-region law firms, working collectively for multinational insurers, brokers and businesses to handle cross-border risks and claims.
Under the new arrangement, DACB’s Zurich Global Insurance team and Wotton + Kearney’s regional team will be responsible for overseeing Zurich’s complex, high value claims in Australia, China, Hong Kong, Malaysia, New Zealand and Singapore.
Commenting on the new appointment, James Morris, Chairman of DAC Beachcroft’s Claims Solutions Group and Client Relationship Partner for Zurich, said, “We are delighted to be supporting this very important part of Zurich’s business in providing strategic claims management across the APAC region.
“Our strong relationship with Wotton + Kearney will be hugely beneficial in ensuring a consistent approach in managing these complex and often commercially sensitive claims and supports our commitment to work with Zurich and its key customers across all jurisdictions. This has always been a core focus for DAC Beachcroft, Wotton + Kearney and Zurich.”
Wotton + Kearney Chief Executive Partner, David Kearney, added, “From our significant work with Zurich in Australia, New Zealand and the broader Asian region, we know that Zurich recognises the importance of business partners truly understanding their customers’ businesses which often cross national borders. With this appointment of DACB and W+K’s best in region teams, we are confident that our collective knowledge will translate to first class claims results for Zurich customers across the Asia – Pac region.”
Zurich Group Chief Claims Officer, Ian Thompson said, “We’re evolving our long-standing relationship with DAC Beachcroft and Legalign Global by introducing the new legal panel within APAC. I’m delighted to build on the success of this trusted partnership and what we’ve achieved so far with legal panel arrangements in other parts of Zurich. Our international customers will benefit from an expert level of legal insight and more consistent experience, particularly where coverage spans multiple jurisdictions. For Zurich, launching this global network for APAC is another proof point in our delivery of our Zurich Claims’ commitment, enabling us to improve our trend analysis within Claims and facilitate proactive decision-making.”
Helen Faulkner, DACB’s Global Head of Insurance, added, “This is a very significant milestone in realising our ambitions to support Zurich and its international customers across all jurisdictions. Zurich is a very important client for the firm and we are thrilled to be expanding our relationship further with this new panel appointment.
“It is both testament to the strength of the relationship that our very large team of lawyers in our Global Insurance practice has established with Zurich over the years, as well as a demonstration of the clear benefits of our Legalign Global alliance in delivering strategic and consistent claims management across multiple jurisdictions.”
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