David Goodwin, Covington & Vita

WRIN.tv speaks with David Goodwin, a partner at the law firm of Covington & Burling, about trends in insurance litigation, during the 2015 IRMI Energy Risk and Insurance Conference.  Mr. Goodwin says insurance companies are afraid of litigation because juries do not like insurance companies  “…when an insurance company is in front of a jury, they know that they are going to have an unsympathetic audience.”

Insurance litigation has evolved over the last 30 years. Within the last ten years, insurers began facing securities litigation and errors and omissions claims.  The biggest losses energy companies see are investor lawsuits and business interruption due as a result of an accident. Mr. Goodwin believes cyber is the principal emerging risk for energy companies.  [Mr. Goodwin represented Target in its cyber breach case and was personally impacted by Home Depot’s cyber breach.] Mr. Goodwin also says there is also a growth in crime claims.

While tort reform has been a big topic over the past 40 years, Mr. Goodwin would rather see the courts work out legal issues as opposed to the “legislature or ballot box.”

Goodwin says energy companies set plans and priorities based on the price of crude oil.   With the decline in oil prices, there will be increased litigation over claims of poor planning. In addition, with companies cutting budgets, it will impact the insurance industry.   On one hand, Mr. Goodwin says, energy companies’ appetite for risk retention has decreased with the decline in oil prices, while risk management budgets have been cut.  Insurers, on the other hand, charge more premium to cover lower layers in the coverage tower. This is a conundrum.

For more from the IRMI Energy Risk and Insurance Conference, visit the IRMI website, or the WRIN.tv On Demand Library.

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