This article was written with the assistance of AI and edited by Angela Sabarese.
In a recent CLM webinar, experts Timothy Wolfe, principal at Watters Wolf Bub & Hansmann, LLC; Beth Jenson Prouty, Arthur Chapman Kettering Smetak & Pikala, PA; Neil Huber, Berkeley Oil & Gas; and Joseph Piekarski, Berkeley Program Specialists, addressed the growing challenges of defending class action lawsuits against insurance companies.
The panelists explored both direct suits against insurers and cases where insurers defend their policyholders. They discussed how class actions have proliferated due to tort reform, with major law firms pursuing these cases to offset shrinking profits from traditional litigation.
Key Challenges
Several key themes emerged from the discussion. First, coordination among multiple insurance carriers presents significant challenges, as these cases typically span multiple policy years and involve numerous insurers. As Huber explained, "One of the biggest challenges comes out of this is the number of carriers that get involved when one of these class action suits is filed. It usually doesn't involve just one year or one tower, it usually involves numerous years, which means now you have the added challenge of having numerous carriers trying to arrange a defense that makes sense to all."
Strategies for the Best Outcomes
The experts emphasized that early settlement often provides the best outcome, though this requires careful coordination and communication. Piekarski stressed the importance of pragmatic decision-making: "Don't let ego get in the way of a good settlement. I've seen it happen way too many times... Is that 3% really going to make the difference in terms of what you're going to continue to spend on defense if that settlement falls through?"
The panelists also highlighted aggressive defense strategies, including venue challenges, federal court removal under the Class Action Fairness Act, and arbitration when applicable. Despite their complexity and cost, Wolfe concluded that "class actions can be an insurance company's nightmare, but they can be successfully defended" with proper strategy and coordination.