In March 2023, we wrote about the failure of Silicon Valley Bank (“SVB”) and potential implications of its takeover by the Federal Deposit Insurance Company (“FDIC”). As we noted then, the FDIC, as receiver for SVB, has broad discretion to manage the bank’s assets and liabilities, including selling assets for the benefit of creditors and bailing out the distressed bank.
Continue Reading Parent Company Beware: Subsidiaries’ Fidelity Bond Claims May Belong to FDIC in ReceivershipBad Faith Claims
Insurance Claims Deserve Better Than an Algorithm’s Opinion
Policyholders increasingly turn to artificial intelligence (“AI”) platforms to answer insurance coverage questions. This is risky because: (1) AI models hallucinate legal content at alarming rates; and (2) AI cannot apply nuanced, fact-specific and jurisdiction-specific legal analysis. As OpenAI Foundation recently acknowledged, “ChatGPT . . . neither has nor uses any degree of legal knowledge or skill.” See
https://fingfx.thomsonreuters.com/gfx/legaldocs/xmvjydomqpr/Nippon%20Life%20v%20OpenAI%20motion%20to%20dismiss.pdf. Any policyholder who receives a “no coverage” answer from AI should consult experienced coverage counsel before accepting that conclusion.
Insurance Industry’s Use of AI: A Fair or Unfair Claim Settlement Practice?
Posted in Bad Faith Claims, Cyber/Data Privacy
The insurance industry has been swift to adopt artificial intelligence (“AI”). According to consulting firm McKinsey & Company, 76% of insurers surveyed have already begun using generative AI in their day-to-day operations. [1] This adoption spans the different facets of insurers’ work cycles, including claims, underwriting, legal, and risk management. Policyholders and their attorneys must remain aware of the potential pitfalls of AI implementation, particularly as it pertains to claims management.
Continue Reading Insurance Industry’s Use of AI: A Fair or Unfair Claim Settlement Practice?The Archdiocese Resurrects Faith in the New York Court System: New York Supreme Court Issues Another Decision Allowing a New York Policyholder to Seek Damages for Bad-Faith Claim Handling
By Shelby Guilbert, Nicholas Hill & McGuireWoods LLP on
Posted in Bad Faith Claims
Last month, the New York Supreme Court issued a well-reasoned order denying the Archdiocese’s insurers’[1] motion to dismiss its claim against them for breach of the covenant of good faith and fair dealing, holding that the policyholder’s complaint sufficiently alleged its Insurers claim handling conduct amounted to bad faith.[2] The Order is part of a new trend in New York that allows bad-faith claims to proceed when styled as claims for breach of the duty of good faith and fair dealing, where the conduct supporting the alleged bad-faith claim is independent of the alleged conduct giving rise to a breach of contract claim, and the policyholder sufficiently alleges damages arising from the bad-faith conduct.
Continue Reading The Archdiocese Resurrects Faith in the New York Court System: New York Supreme Court Issues Another Decision Allowing a New York Policyholder to Seek Damages for Bad-Faith Claim Handling