Jeremy King Quoted in Law360 on How Norfolk Southern’s Proposed Settlement Highlights the Importance of Proactive Risk Management

Chair of Olshan’s Insurance Coverage Practice Jeremy King was quoted in a Law360 article (subscription required) on the Norfolk Southern Railway Co.'s proposed $600 million settlement with residents and businesses in East Palestine, Ohio, stemming from last year's train derailment and toxic chemical spill and how this highlights the importance of a proactive risk management department and transparency between policyholders and carriers. Jeremy explained that having certain practices in place allows policyholders to respond strongly when a catastrophic event takes place, including having a dedicated risk management department that works alongside the legal department and business units to actively identify and mitigate risks, and regularly reviewing and improving their insurance program to ensure that it will respond in times of crisis and that policies don't contain any exclusions barring fundamental business risks: “When a situation has as much notoriety as this, it's very unlikely that the policyholder may miss the step of providing notice.” Jeremy noted that the expectation would be that Norfolk Southern put its insurers on notice quickly, bringing the insurers into both the defense of arising litigation and potential reimbursement for cleanup costs. Regarding the proposed $600 million settlement, he said the mediation itself indicated open communication between key players as it was overseen by former U.S. District Judge Layn Phillips, who is well-versed in issues of insurance coverage and, based on that, is expected to have brought all interested parties to the table rather than taking an exclusionary approach. Jeremy further explained that it is important to a policyholder to reach an agreement on personal injury claims in which future claims are released. Although the management of such an arrangement is a little complex, the process benefits the policyholder rather than it taking the risk of facing multiple lawsuits. Looking at the big picture of ongoing litigation and any potential scope of coverage, Jeremy said, attention will turn to what remains of carriers' policy limits. He noted that self-insured retentions remain a major focus for policyholders: “The self-insured retention is one of the things on the policy that often has a great deal of attention during underwriting and is negotiated with the underwriters.” Jeremy concluded that policyholders do not seem to be less willing than they were previously to have a sizable self-insured retention.