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Discovery of Insurer Reserve Information

Marc Mayerson has a great discussion  (which is continued in the comments that follow his post) on the issue of the discovery of insurer reserve information at the Insurance Scrawl blog.  In the comments section of his post, he references an article on this topic from that may also be of interest entitled:  Insurance Reserves Discoverable in Bad Faith Case.

His discussion begins as follows:

Discovery of Insurer Reserve Information: Implied Admission of Coverage or Attorney Work Product ? Or Both?

One common area of discovery disputes in insurance-coverage cases concerns reserve information from carriers. The policyholder-side thinking goes that it is inconsistent with the insurer’s flat denial of coverage for it to accrue a reserve on the claim, especially a reserve at close to full value. There is some logical and emotional appeal to this “putting your money where your mouth is” discovery, that is, requiring that what the carrier says to the jury be consistent with where it is putting its money.

Of course, a reserve accrued on the claim doesn’t prove conclusively there is coverage: carriers argue that reserves simply reflect litigation risk or that statutory requirements re solvency compel the accrual of reserves – points that go to the weight of the evidence. Carriers are concerned that reserve evidence is prejudicial to their coverage denial in the eyes of jurors (because a reserve seems to be an implied admission of coverage or at least the reasonable possibility of coverage), and so carriers tend to fight assiduously to prevent reserve information from coming to light.

He then goes on to discuss a recent decision on this issue from the Supreme Court of West Virginia.

This is an interesting discussion from a blog that I highly recommend to insurance defense practitioners and plaintiff's counsel alike.


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