Mediation Is the Best Method To Resolve Long-Tail Coverage Disputes

When the New York Court of Appeals issued its decision in In re Viking Pump, some may have hoped for more settlements in light of new clarity in the law. Policyholders viewed the decision favorably. On balance, the decision does lean towards policyholders, and in many cases it may provide some significant leverage for policyholders. But given the process courts must follow in deciding allocation and exhaustion issues in New York, long-tail insurance claims will continue to strain court resources, and in certain cases, may even harm policyholders. We may even see policyholders arguing for pro rata allocation and horizontal exhaustion and insurers arguing for joint and several allocation and vertical exhaustion in some cases. Focused mediation early in these disputes may provide more cost-effective resolutions than litigation under Viking Pump, and may avoid unexpected results. At a minimum, mediation can provide a confidential forum for the parties to have a thorough conversation about a range of possible outcomes, hear the strengths and weaknesses of those arguments and then make a forward-looking evaluation of the costs and benefits of the litigation.

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New York Law Journal