An issue that comes up when negotiating a complex claim with insurance carriers in an “all sums” state, like Ohio, is the right of the carrier selected by the policyholder to seek contribution from other carriers whose policies have been triggered by the claim.
In Ohio, per the Ohio Supreme Court decision in Goodyear Tire & Rubber Company v. Aetna Casualty & Surety Co., 95 Ohio St. 3d 512 (2002), when a policyholder selects an insurer to provide coverage for the claim, that insurer may seek contribution from other insurance carriers whose policies were triggered by the occurrence.
But what if the other triggered policies includes carriers who issued fronted policies or retrospective premium rated policies to the policyholder? What if the other triggered policy years have significant deductibles or self-insured retentions to be paid by the policyholder? Can a contribution claim be made which results in a reduction in the amount the policyholder receives for its claim?
The answer is no. Should contribution be sought against the other policies which are fronted policies or retrospective premium rated policies, or policies that have deductibles or self-insured retentions, the effect would be to impose loss back upon the policyholder, which defeats the policyholder’s right to recover “all sums” (all of its claim costs) for the claim. Goodyear, Keene Corporation v. Insurance Company of North America, 667 F.2d 1034 (D.C. Cir. 1981), Manor Care, Inc. v. First Specialty Insurance Corp., 2006 U.S. Dist. LEXIS 48249 (N.D. Ohio 2006), Owens-Corning Fiberglas Corp. v. American Centennial Ins. Co., 74 Ohio Misc. 2d 183 (Com. Pls. 1995); Millennium Chemicals, Inc., v. Lumbermens Mutual Casualty Co., 2001 U.S. Dist. LEXIS 20974 (N.D. Ohio 2001) are all decisions that can be read to require that the policyholder receive payment of the “full amount of indemnity that is due” and “complete security” from each policy triggered by the occurrence without any reduction due to deductibles, self-insured retentions, fronted policies or retrospective premium rated policies.
The policyholder has the legal right to be made whole and a contribution claim cannot defeat that legal right. Thus, in circumstances where a contribution claim is sought against fronted policies or retrospective premium rated policies, the contribution claim will not succeed. Further, in circumstances where a contribution claim is sought against policies with deductibles or self-insured retentions, the policyholder will not be required to satisfy the deductibles or self-insured retentions.
When negotiating asbestos, toxic tort, environmental or other “long-tail” insurance claims in an “all sums” state, it is important for companies to carefully review all of the triggered policies and select the best policy or policies for the allocation, taking into account the chosen carrier’s contribution rights and the impact of any claim for contribution that may be made by that carrier. Discussing the contribution issue up front with the selected carrier can save time and money later. Companies may want to hire an insurance coverage lawyer to assist in the analysis and discussions with the selected insurance carrier.
I welcome your feedback.
 Keene, 667 F.2d at 1050.
 Goodyear, 95 Ohio St. 3d at 516.
Lori Siwik and Mark Siwik are the founders of SandRun Risk. They apply the principles of vertical leadership and lean six sigma to the discipline of risk management. From time to time they share their blog with guest authors who write about important risk management principles.