WILLIAM D. HAGER

EXPERT INSURANCE WITNESS 

EXPERTISE AS TO BUSINESS INTERRUPTION INSURANCE

I   Introduction.  With the impact of the COVID-19 outbreak and the resultant civil authority directives as to closure, claims as to business interruption insurance/coverage have and will result in significant numbers.  Below are some brief points in general as to the coverage.  Of course, the key as to whether there is coverage is the policy language itself.  

Below are some of the cursory considerations as to business interruption coverage and immediately following those considerations – is my expertise as it relates to this coverage.  Contact me at will as to my expertise as you see fit.  

Beyond Ordinary Business Interruption Coverages.  In all of this, bear in mind that business interruption insurance is provided by hundreds of insurers who write the coverage on hundreds of different forms, with the coverage varying greatly between and among these insurers and their coverages.  

By way of example, some commercial property policies provide business interruption coverage through multiple path.  As an example, some policies provide coverage for losses resulting from infectious disease; some policies provide for an enlarged definition of civil authority actions which result in coverage when access is restricted for that business – regardless of whether there is property damage at the business location.  Further, there are endorsements which provide coverage for property damage as a result of a contagious disease; coverage for business interruption loss in circumstances where the insured has limited access to the properties in anticipation of the disease, even without a civil authority order.  Property damage may include viral exposure that limits business occupancy; some policies include coverage for imminent threat of damage.  So, all of this requires careful scrutiny of applicable coverages.   

Below, I define the coverage available under typical business interruption policies, followed by my expertise in these matters 

Defined.  Business interruption insurance provides coverage that replaces business income lost in a disaster. The event could be, for example, a fire or a natural disaster or the COVID-19 outbreak.   Business interruption insurance is not sold as a separate policy but is either added to a property/casualty policy or included in a comprehensive package policy such as a CGL policy or provided as an endorsement or rider.

  • Replaces Lost Income.  Business interruption insurance provides coverage that replaces income lost in the event that business is stopped for a named peril in the policy such as fire, or a natural disaster – or as broad coverage including events like COVID-19, in circumstances where there are no applicable exclusion. 
  • Covers Operating Expenses.  Business interruption insurance typically covers (1) operating expenses, (2) a move to a temporary location if necessary, and (3) payroll, taxes, and loan payments.
  • COVID-19.  Business interruption insurance also applies if government actions cause operations to cease temporarily, resulting in a loss for a firm, such as the government-mandated shutdown of all non-essential businesses in the wake of the COVID-19 outbreak. Again, the key is the policy language as to coverage and a careful review of the exclusions. 
  • Premiums: Tax Deductible. Business interruption insurance premiums are tax-deductible as ordinary business expenses. 
  • Policy Language.  The policy provides its benefits only if the cause of the business income loss is covered in the policy. The amount payable generally is based on the prior financial records of the business.
  • Coverage Period. The coverage typically lasts through the end of the interruption period, as defined by the policy. Most business interruption insurance policies define this period as the date that the covered peril began until the date that the damaged property is physically repaired and returned to the same condition that existed prior to the disaster or until the business can re-open

Coverage.  Most business interruption insurance cover the following items:

  • Earnings. Based on prior months’ performance, a policy will provide reimbursement for profits that would have been earned had the event not occurred.
  • Operating Costs. These can include operating expenses and other incurred costs of doing business.
  • Relocation. Some policies cover the costs involved with moving to and operating from a temporary business location.
  • Retraining.  In the wake of a business interruption event, a company will often need to replace machinery and retrain personnel on how to use the new machinery. Business interruption insurance may cover these costs.
  • Reasonable Expenses. Business interruption insurance will provide reimbursement for reasonable expenses (beyond the fixed costs) that allow the business to continue operating while the business gets back on solid footing.
  • Civil Authority Closures. A business interruption event may result in government-mandated closure of business premises that directly cause financial loss. Examples include forced closures because of government-issued curfews or street closures related to a covered event or Coronavirus Directives. 
  • Salaries. Coverage of wages is essential if a business does not want to lose employees while shutting down. This coverage can help a business owner make payroll when they cannot operate.
  • Coverage for Taxes. Businesses are still required to pay taxes, even when disaster hits. Tax coverage will ensure a business can pay taxes on time and avoid penalties.
  • Loan payments. Loan payments are often due monthly. Business Interruption coverage can help a business make those payments even when they are not generating income.
  • Other Considerations.  The insurance company is obligated to pay policy benefits only if the insured actually sustained a loss as a result of the interruption. The amount that will be recouped by the business will not exceed the limit stated in the policy. To learn more about Coronavirus & Insurance Agents’ & Broker Liability, visit the Coronavirus Liability page.

II.   SUMMARY HAGER’S BUSINESS INTERRUPTION EXPERTISE

In connection with opinions, I would enter in a case of business interruption coverage. I would draw on my expertise as (i) summarized immediately below this Section II of the document and later as set out in Section III of this document, (ii) as set forth in my Curriculum Vitae available here and (iii) as set forth in my related websites – to be read together with the balance of background – as follows:

Throughout this document, for ease of reading, I will refer to business interruption policies, though the reader should know that business interruption coverage is provided within broader policies, like CGL policies.  Generally, business interruption coverage is not provided in a free-standing policy.  In addition, in this document, when I refer to “business interruption insurers or insurance companies” I mean insurers who sell policies with business interruption coverage.  

This matter calls for expertise as to, among other things, the following matters: (i) business insurance coverages (sometimes, just “policies”), their provisions and the regulations of such coverage, (ii) the obligations of an insurer who provides business interruption coverage in terms of claims; and (iii) the obligations of an insured in connection with a business interruption claim.  

Business Interruption Insurance Expertise:  State Insurance Regulation.  My expertise as to these matters can be found as follows: I am a former:

  • Commissioner of Insurance (Iowa), as appointed by the Governor of Iowa;
  • First Deputy Commissioner of Insurance, as appointed by the Commissioner of Insurance;
  • Administrative Law Judge (“ALJ”), f/k/a Hearing Officer, to the Department of Insurance, as appointed by the Commissioner of Insurance; 
  • Assistant Attorney General assigned on a full-time basis to the Department of Insurance, as appointed by the Attorney General of Iowa. 

In those capacities, on a daily basis, I had full regulatory oversight and responsibility for, and I dealt directly with, (i) business insurance coverages, their provisions and the regulations of such coverage, (ii) the obligations of an insurer who provides business interruption coverage in terms of claims; and (iii) the obligations of an insured in connection with a business interruption claim.    

Business Interruption Insurance Expertise:  Multi-State Insurance Regulation.  My expertise as to these matters can be found as follows: I am a former:

  • Member of the National Association of Insurance Commissioners (“NAIC”); 
  • Elected Member of the NAIC’s Executive Committee.  
  • As an Elected Member of the Executive Committee, that oversight included responsibility for the so-called “C Committee” relating to Property and Casualty Insurance, inclusive of the business interruption insurers and policies and their issues. 

Business Interruption Insurance Expertise: Most Recent LegislativeIn addition to my regulatory background, I have served or am serving in the following capacities, each of which included daily knowledge of and interaction with (i) business insurance coverages, their provisions and the regulations of such coverage, (ii) the obligations of an insurer who provides business interruption coverage in terms of claims; and (iii) the obligations of an insured in connection with a business interruption claim.  

  • Elected Member of the Florida House of Representatives (most recently – I was first elected in 2010 and re-elected in 2012 and 2014 and 2016) where I serve or have served as a Member and Vice Chairman of the Insurance Committee as well as its upstream parent committee, the Commerce Committee, which collectively have legislative oversight over all insurance issues in the state (as administered by the Florida Office of Insurance Regulation) including those relating to business interruption insurance and related insurer and insured obligations.  Florida’s business interruption statutory and regulatory framework parallels in most ways, those of the balance of the states 
  • In addition, I have sat as Vice Chairman of the Civil Justice Subcommittee of the Florida House, which has responsibilities as to Florida laws that establish (among other things) liability.

Business Interruption Insurance Expertise: Other LegislativeIn addition to my state and national insurance regulatory background and my current legislative background, I have served in the past in the following capacities, each of which included daily knowledge of and interaction with (i) business insurance coverages, their provisions and the regulations of such coverage, (ii) the obligations of an insurer who provides business interruption coverage in terms of claims; and (iii) the obligations of an insured in connection with a business interruption claim.  

  • Legal Counsel to the Iowa House of Representatives; 
  • Chief of Staff, f/k/a Administrative Assistant, at the U.S. House of Representatives, 
  • Deputy Mayor and Council Member of the Boca Raton City Council, where I served as the Council’s lead on insurance issues; 

Business Interruption Insurance Expertise:  Actuarial. In addition to my regulatory background at both the state and national levels and my legislative background as to business interruption matters, I have served or am serving in the following capacities, each of which included daily knowledge of and interaction with (i) business insurance coverages (sometimes, just “policies”), their provisions and the regulations of such coverage, (ii) the obligations of an insurer who provides business interruption coverage in terms of claims; and (iii) the obligations of an insured in connection with a business interruption claim.  

  • American Academy of Actuaries, Washington D.C.  General Counsel and Chief Lobbyist for the American Academy of Actuaries, Washington, D.C., whose members establish the rates for business interruption at both the primary and reinsurance levels; 
  • Actuarial Standards Board (ASB), Washington D.C.  I served as counsel to the forerunner of ASB, namely the Interim Actuarial Standards Board.  ASB promulgates professional standards for the actuarial profession including those relating to business interruption and runs parallel to Financial Accounting Standards Board (FASB), which does the same work on the accounting side relating to accounting for American business. 
  • National Council on Compensation Insurance (see below).  As President and CEO of this business interruption company, I had responsibility for some 1,500 employees, of whom about 150 were in the Actuarial Division.  NCCI had responsibility to formulate and then file for approval, some $15 billion of proposed workers’ comp premium annually.  During my tenure at NCCI, I oversaw about $100 billion of premium filings with State Departments of Insurance.  
  • Commissioner of Insurance.  As Commissioner, I approved and disapproved business interruption proposed rates, as submitted by NCCI and did so by applying actuarial methodologies to the proposed rates.  In addition, I had responsibility to approve or disapprove all prior approval rates, which at that time, included most all personal and commercial property and casualty premiums used by most of the insurers in the state.   
  • First Deputy Commissioner of Insurance.  As First Deputy Commissioner of Insurance, like the Commissioner, I also approved and disapproved business interruption proposed rates, as submitted by NCCI and did so by applying actuarial methodologies to the proposed rates.  In addition, I had responsibility to approve or disapprove all prior approval rates, which at that time, included most all personal and commercial property and casualty premiums used by most of the insurers in the state.   
  • Degree in Mathematics.  I hold a B.A. in mathematics, the intellectual foundation of actuarial science.  

Business Interruption Insurance Expertise:  Industry. In addition to my regulatory background at both the state and national levels and my legislative background and my actuarial background as to business interruption matters, I served in the following capacity, 

  • President and Chief Executive Officer of the National Council on Compensation Insurance (NCCI), whose daily responsibilities included that of responsibility to formulate workers’ comp policies in the first instance, prepare underwriting manuals and related descriptions thereof (the so-called “Scopes Manual”); prepare e-mods for insureds throughout much of the U.S.; prepare rates for approval to the Commissioners of Insurance throughout most of the U.S.; prepare reinsurance materials for reinsurers of business interruption and make NCCI’s expertise available to regulators and legislators throughout the U.S. as to matters such as those at issue here.  Workers compensation is in the family of property casualty insurance as is business interruption insurance.  

Business Interruption Insurance Expertise: Insurance Arbitration. In addition to my regulatory background and my legislative and my industry background as to business interruption matters, I have served or am serving in the following capacities, each of which included daily knowledge of and interaction with (i) business insurance coverages, their provisions and the regulations of such coverage, (ii) the obligations of an insurer who provides business interruption coverage in terms of claims; and (iii) the obligations of an insured in connection with a business interruption claim.  

  • Nationally Certified Insurance Arbitrator (ARIAS-US), where I sit as an arbitrator on disputes between (among others) business interruption insurers and other insurers or insurer’s agents.  

Business Interruption Insurance Expertise: Reinsurance Arbitration. In addition to my regulatory background and my legislative and my industry background as to business interruption matters, I have served or am serving in the following capacities, each of which included daily knowledge of and interaction with (i) business insurance coverages, their provisions and the regulations of such coverage, (ii) the obligations of an insurer who provides business interruption coverage in terms of claims; and (iii) the obligations of an insured in connection with a business interruption claim.  

  • Nationally Certified Reinsurance Arbitrator (ARIAS-US), where I sit as an arbitrator on disputes between (among others) business interruption insurers and their reinsurers, 

Business interruption Insurance Expertise: Current Practice: Insurance and Reinsurance Lawyer.  In addition to my regulatory background and my legislative background and my industry background and my reinsurance arbitration background as to business interruption matters, I have served or am serving in the following legal capacities, each of which included daily knowledge of and interaction with (i) business insurance coverages, their provisions and the regulations of such coverage, (ii) the obligations of an insurer who provides business interruption coverage in terms of claims; and (iii) the obligations of an insured in connection with a business interruption claim.  

  • As stated, I am an insurance lawyer admitted to practice, all by examination in Iowa, Illinois and Florida.
  • I am currently a practicing Florida insurance lawyer, at the Hager Law Firm, Boca Raton, Florida, in private practice; 

Business Interruption Insurance Expertise: Prior Practice: Insurance and Reinsurance Lawyer.  In addition to my regulatory background and my legislative background and my industry background and my reinsurance arbitration background and current practice of law as to business interruption matters, I have served in the prior practice of law in the following legal capacities, each of which included daily knowledge of and interaction with (i) business insurance coverages, their provisions and the regulations of such coverage, (ii) the obligations of an insurer who provides business interruption coverage in terms of claims; and (iii) the obligations of an insured in connection with a business interruption claim.  

  • Legal Counsel to the Iowa House of Representatives; 
  • Iowa Assistant Attorney General;
  • Counsel to the Professional Insurance Agents Association (IA), many of whose members as agents sold business interruption insurance; 
  • Iowa Counsel to the Property Casualty Insurance Association of America (PCIAA), an organization of smaller stock property casualty insurers, many – but not all of whom – sold business interruption insurance;  
  • Insurance and reinsurance lawyer with the firm of Hager and Schachterle; 
  • General Counsel to the American Academy of Actuaries, Washington D.C.; 

Business Interruption Insurance Expertise: Undergraduate Educational Background.  In addition to my regulatory background and my legislative background and my industry background and my actuarial background and my reinsurance arbitration background and my legal background as to business interruption matters, my undergraduate education was helpful in this matter:

  • Bachelor’s degree (B.A.) in mathematics (University of Northern Iowa);

Business Interruption Insurance Expertise: Graduate Educational Background.  In addition to my regulatory background and my legislative background and my industry background and my actuarial background and my reinsurance arbitration background and my legal background as to business interruption matters, my graduate education was helpful in this matter:

  • Master’s degree (M.Ed.) in education (University of Hawaii);
  • Juris Doctorate: (J.D.) University of Illinois, Champaign Urbana; 

Business Interruption Expertise: Insurance Certifications and Appointments.  In addition, the following certifications also support my expertise in these matters.

  • Reinsurance Arbitrator certified by ARIAS-US; 
  • Insurance Arbitrator certified by ARIAS-US; 
  • Graduate, the NAIC’s Commissioners School;
  • Member, Past U.S. Insurance Commissioners Organization (Passé Club); 
  • Member, the Executive Committee of the NAIC; 

Business Interruption Expertise: Licenses.  In addition, the following licenses also support my expertise in these matters.

  • Members of the following bars, all by examination: 
  • Illinois, 
  • Iowa; and
  • Florida; 
  • Admitted to Practice before the Florida Supreme Court; 
  • Admitted to practice before the U.S. Supreme Court; 

Other Expertise. The above expertise should be read together with the balance of my background as set forth in my attached CV, Section III of this Report and as set forth in the various websites, previously described.  

III.   MORE GENERAL EXPERTISE

TO RENDER THESE EXPERT OPINIONS

In addition to my specific expertise relating to this case and set out above under Section II of this Report, I set out below my more general expertise against which I enter the expert opinions in this case.  The below material should be read together with Section II above and as well together with my attached Curriculum Vitae, including referenced websites (See Appendix A).

A.  Formal Education.

  • 1.  Bachelor’s Degree in Mathematics.  I hold a bachelor’s degree in secondary mathematics education from the University of Northern Iowa;
  • 2.  Master’s Degree in Psychology. I hold a master’s degree in educational psychology from the University of Hawaii; and 
  • 3.   Juris Doctor’s Degree.   I hold a J.D. degree from the University of Illinois. 

B.  Licensure and Certification.

  • 4.   Certified Reinsurance Arbitrator.  I am certified by ARIAS as one of about 400 U.S. certified reinsurance arbitrators; 

Certified Insurance Arbitrator.  I am also certified by ARIAS as one of about 400 insurance arbitrators, where I sit in disputes in matters of insurer versus insurer. 

  • 5.  Admitted to Practice Law.  I am licensed and admitted to practice law upon examination in the states of Iowa, Illinois, and Florida; and
  • 6.  Admitted to Practice before the U.S. Supreme Court.  I am also admitted to practice before the U.S. Supreme Court.  

C.   Insurance Expert.  

  • 7.  Expert Witness.   I have served as an expert witness in several cases throughout the U.S. and have been qualified at trial as an expert witness in about 20 states. 
  • 8.   Insurance Consultant to the U.S. Attorney:  By way of example of my various assignments, I have been retained in the past by the U.S. Attorney, the Middle District of Florida, as an insurance consultant in a complex civil insurance matter.   
  • 9.   Insurance Consultant to the U.S. Department of Justice (Main).  Similarly, I have also been retained by the U.S. Department of Justice as an insurance consultant in a complex insurance case. 
  • 10.  Expert Witness: The United States Air Force.  I have also been retained and testified as an expert witness for the United States Air Force in a complex CGL matter in connection with pollution liability.  
  • 11.    Expert Witness: on Behalf of or Before Various Departments of Insurance.  I have also been retained as an expert witness by the: (i) FL OIR/ Division of Liquidations and have testified on their behalf in Florida federal and state court, (ii) the Arizona Department of Insurance/ Division of Liquidations and testified on their behalf.  In addition, I have testified as an expert before the Florida, Nevada, Oklahoma, South Dakota, Wisconsin, and Texas Departments of Insurance.   

D.   Industry Background:  Reinsurance Arbitrator.  

  • 12.  Reinsurance Arbitrator: Business interruption Cases.  November 2003 to Present.  My background includes extensive exposure to the various reinsurance mechanisms and relationships.  Along these same lines and as indicated above, I am a certified ARIAS-US reinsurance arbitrator (see immediately below) and have sat as an arbitrator in cases between business interruption insurers and their reinsurers.  The relevance of this experience to this case is that reinsurers have substantial influence on their underlying business interruption insurers.   

As of November 2003, I was certified by AIDA Reinsurance and Insurance Arbitration Society, United States (“ARIAS-US”) as an arbitrator for reinsurance and insurance matters.  Today, there are about 200+ individuals so certified by ARIAS in the United States.  

ARIASUS certifies knowledgeable and reputable professionals for service as panel members in reinsurance and insurance arbitration matters.  The organization’s criteria for certification are as follows: 

  • 10 years of significant specialization in the insurance/reinsurance industry;
  • Arbitration experience – must have completed appropriate credited ARIAS seminars;
  • A member in good standing of ARIAS-US; and 
  • Appropriate endorsement from existing members.

E.    Industry Background in General

  • 13.  CEO of a Major Property Casualty Insurance Entity Regulated Throughout the US; President and Chief Executive Office of the National Council on Compensation Insurance (NCCI; Boca Raton, Florida), 1990 – 1998.  NCCI is one of the larger and more pervasive U.S. insurance organizations.  During my tenure as President and CEO, NCCI had (and continues to have) responsibility to accurately price and file pricing for some $12 – $15 billion of workers’ compensation insurance in about 40 states throughout the U.S.  NCCI prepared proposed premium filings for regulators to approve by extracting key data from its 600-member insurance companies and then used that data to project necessary premium changes.  NCCI accomplished this mission through some 1,000 employees of which approximately 600 were professionals.  NCCI had annual revenues of $140 million. 

Doing Business Throughout the U.S.:  Insurance Program.  As CEO of NCCI, I had daily exposure and responsibilities to the various state Departments of Insurance.  This included compliance with the Insurance Codes of the various states and the administrative regulations as to insurance as promulgated by the related Departments of Insurance. 

Underwriting and Claim Practices.  In addition, and relevant to this case, NCCI had a vested interest in member insurer underwriting and claim practices in that the industry’s reputation for fair underwriting and defense and coverage practices ultimately impacted regulatory attitudes toward NCCI’s premium approval process. 

Industry Standards of Practice.  While President and CEO of NCCI, I visited and physically toured and reviewed in excess of 400 insurance companies and gained direct exposure to the procedures and processes and standard industry practices of the U.S. insurance community and its claim practices.  I have had extensive exposure to insurer practices and procedures in all lines of insurance, including business interruption.    

Familiar with this State’s Insurance Regulatory Scheme.  While CEO of NCCI, it was (and remains) (i) licensed to do business throughout the U.S.  In that capacity, my company, NCCI was subject as well to the regulatory scrutiny of the various state DOIs, as well as being subject to all applicable provisions of the various state’s Insurance Codes.  NCCI was also subject to state and federal jurisdiction.  I am familiar with the regulatory and statutory scheme that is brought to bear on the business interruption insurance matters at issue in this case.  

  • 14.  General Counsel and Director of Government Relations to the American Academy of Actuaries (Washington D.C.), 1980 – 1983.  I served as General Counsel and Director of Government Relations for the American Academy of Actuaries, including advising on admissions, discipline, federal antitrust and general corporate law.  I represented the 20,000-member professional organization before Congress (e.g., Senate Committees on Banking, Commerce, Finance and Labor, and House committees on Education, Labor, Energy, and Ways and Means) and the various federal regulatory agencies.   

Business interruption Insurance Companies and the Academy.  The Academy is the professional organization of actuaries and includes qualified actuaries from all disciplines and all forms of insurers.  Academy members included affiliation with virtually every business interruption insurance company in America.  The Academy’s Board of Directors was likewise made up of leading insurance company executives from such companies.  

  • 15.  Risk Metrics Corporation.  I co-founded this Florida based information company in 1998.  Risk Metrics (including Datalister, Inc.) gathers and sells public data relating to property casualty insurance to a wide range of insurance-oriented customers, including insurance agents.  A number of years ago, I sold my interest in this corporation.  
  • 16. Attorney in Private Practice.  As an attorney in private practice, I represented a number of insurer interests and became familiar with applicable regulatory and industry standards of practice.  Those interests included the position of Iowa Counsel to the Property Casualty Insurance Association of America (PCIAA).  

Business interruption Insurance Issues.  Those interests also included intimate involvement with business interruption insurance, as counsel to the:

Property Casualty Insurers Association of America (PCIAA – IA), some of whom but not all of whom – sold business interruption insurance; 

Professional Insurance Agents of Iowa, whose agents sold business interruption insurance; and  

The Iowa Association of Life Underwriters (life, health, and annuity insurance agents).  

Specific duties as counsel at the PCIAA (whose members wrote business interruption coverage) and the Professional Insurance Agents of Iowa (who sold, among other coverages, business interruption insurance) and the Iowa Association of Life Underwriters (life, health and annuity insurance agents) included in-depth familiarity with business interruption insurers, their agents and their defense and coverage practices.

F.  Regulatory

  • 17.  Commissioner of Insurance, Iowa 1986 – 1990.  As Insurance Commissioner appointed by Governor Terry Branstad in July 1986, I was responsible for the regulatory oversight of all insurance companies, agents and brokers authorized to conduct business in the state of Iowa.  My agency was responsible for solvency oversight, insurance company examinations, financial and accounting matters of insurance companies, consumer protection, agent and broker licensing, and oversight of business interruption insurance company practices, including defense and coverage and pricing practices.  In particular, that oversight included the responsibility of overseeing practices of business interruption insurer defense and coverage and claim and rate making practices.  In addition, I oversaw the state regulation of the securities industry with Iowa’s Superintendent of Securities reporting directly to me.

Regulatory Oversight:  Business Interruption Insurer Practices.  In addition, as Insurance Commissioner, my responsibilities included oversight over the education, licensing, discipline and general supervision of all business interruption insurance companies in the state.  I am very familiar with the responsibilities and applicable obligations that come to bear upon business interruption insurance companies. 

Regulatory Oversight:  Business Interruption Insurance Claims Settlement, Including Defense and Coverage issues.  As Insurance Commissioner, I also had day-to-day responsibility to assure that all underwriting and defense and coverage practices carried out by business interruption insurance companies doing business in the state met their duties, obligations and statutory and regulatory responsibilities as they priced their policies and underwrote policies and settled cases, including obligations as to providing a defense and coverage matters. 

Financial Examination of Business Interruption Insurance Companies.  As Insurance Commissioner, I directed and oversaw the examination of all insurance companies authorized to do business in the State of Iowa.  Those examinations included focus on both financial matters (so called triennial examinations of insurers – of which well over 100 such examinations were conducted while I was Commissioner) and examinations of specific complaints about insurers (so called Market Conduct Examinations – well over 50 such exams were conducted while I was Commissioner).  

Market Conduct Examinations of Business Interruption Insurer Pricing and Defense and Coverage Practices.  Market Conduct Examinations focused on marketplace issues such as those at issue in this case, specifically examining business interruption insurance companies as to compliance with their claim and coverage practices.  Concurrent with such exams, I personally reviewed and approved the final Examination Reports before they were issued.  

In addition, in many of these instances, I visited the subject business interruption insurer before the Examination Report was issue, including walking the floors of such insurance companies – reviewing their effected operations firsthand.   These exams were carried out applying the criteria set forth in the Market Regulation Handbook, as authored by all the Commissioners of Insurance throughout the U.S.  The Handbook is used by every DOI in the U.S.  

Prosecution of Business Interruption Insurance Companies.  As Insurance Commissioner, I employed a full-time team of lawyers who fielded consumer complaints relating to all areas of business interruption insurance company operations.  Indeed, many of these complaints, as well as results of Market Conduct Examinations, resulted in formal action under the state’s Administrative Procedures Act.  From time to time, I served as the Administrative Law Judge, f/k/a/ the Hearing Officer – as to such matters.

Major Insurance State.  Iowa has about 1,000 authorized property and casualty insurance companies, many of whom write business interruption insurance and over 500 life insurance companies and an unusually large number of domestic insurance companies and as such, insurance regulation in that state is a serious job.  

Familiarity with State Insurance Regulation.  As Insurance Commissioner in Iowa with interaction with the balance of the U.S. Insurance regulators, as a member of the NAIC with frequent interaction with the NJ-DOI and as CEO of NCCI, I am familiar with the regulatory scheme in place in the various states of the U.S.

  • 18.  National Association of Insurance Commissioners (NAIC), 1986 – 1990.  Concurrent with my service as Iowa Insurance Commissioner, I served as a member of the NAIC.  The NAIC is an organization of the Insurance Commissioners of all 50 states and meets quarterly in locations throughout the U.S. to consider and evaluate national insurance issues.  Further, the organization is professionally staffed with more than one hundred personnel.  The organization is based in Kansas City, Missouri.  The NAIC considers all major insurance issues and then promulgates model insurance laws and regulations, which are then routinely (but optionally) adopted at the individual state level, including matters relating to business interruption insurance. 

NAIC Chairmanships – Chairman of the Midwest Zone.  I was elected by my fellow Insurance Commissioners from the Midwest Zone (composed of the Midwest states, constituting about one quarter of all of the states) to provide leadership and representation of the Midwest before the balance of the states.  This position included a position on the Executive Committee of the NAIC as well as major responsibilities relating to the assignment of states (and their related examiners) to specific examinations, both triennial and Market Conduct.  

NAIC Leadership:  Member of the Executive Committee: Oversight over the Property Casualty (so-called “C” Committee).  I also served as an elected member of the Executive Committee of the NAIC, the body that served as the steering committee of the organization, providing leadership between full membership meetings and providing recommendations to the full membership as to complex or politically charged issues within the organization.  

Property Casualty Committee.  This position included oversight over the Property Casualty – Committee (so called “C” Committee), which had nationwide responsibility over most all aspects of business interruption policies and their insurers.  That Committee’s mission statement is as follows:

“ …  to monitor and respond to problems associated with the products, delivery and cost in the property/casualty insurance market and the surplus lines market as they operate with respect to individual persons and businesses. The Committee also is to monitor and respond to problems associated with financial reporting matters for property/casualty insurers that are of interest to regulatory actuaries and analysts and to monitor and respond to problems associated with the financial aspects of the surplus lines market.”

Other NAIC Chairmanships:  I also served in a number of NAIC capacities.  My service on the following committees has been helpful in this matter:

  • Member, the Blanks Committee
  • Member, Guarantee Fund Committee
  • Member, Rehabilitator and Liquidators Committee 
  • Member, Casualty Actuarial Committee
  • Member, Commercial Lines Committee
  • Member, Valuation of Securities Committee, 
  • Member, International Insurance Relations Committee
  • Member, Accounting Practices and Procedures Committee and 
  • Member, State and Federal Legislative Committee.

Ongoing Regulatory Involvement.  In the years since leaving the regulatory ranks, I have continued to be closely involved with the NAIC and the regulatory community.  As President and CEO of NCCI, I was in regular attendance at meetings of the NAIC and continue to attend these meetings and to be actively engaged with the regulatory process.  Included in this attendance were my observations at the NAIC of the regulation of the industry.  

  • 19.  First Deputy Commissioner of Insurance, Iowa 1976 – 1978.  As First Deputy Insurance Commissioner, I was responsible for the regulatory oversight of all insurance companies, agents and brokers authorized to conduct business in the state of Iowa.  I was responsible for solvency oversight, insurance company examinations, financial and accounting matters of insurance companies, consumer protection, agent and broker licensing, and oversight of business interruption insurance company practices, including claim, defense, and coverage practices.  In particular, that oversight included the responsibility of overseeing practices of business interruption insurer claim and coverage practices. 
  • Regulatory Oversight:  Business interruption Insurer Practices.  In addition, as First Deputy Insurance Commissioner, my responsibilities included oversight over the education, licensing, discipline, and general supervision of all business interruption insurance companies in the state.  I am very familiar with the responsibilities and applicable obligations that come to bear upon business interruption insurance companies. 

Regulatory Oversight: Business interruption Insurance Claims Practices, including Coverage and Claim Issues.  As First Deputy Insurance Commissioner, I also had day-to-day responsibility to assure that all claim and coverage practices carried out by business interruption insurance companies doing business in the state met their duties, obligations, and statutory and regulatory responsibilities as they settled cases. 

Financial Examination of Business interruption Insurance Companies.  As First Deputy Insurance Commissioner, I directed and oversaw the examination of all insurance companies authorized to do business in the State of Iowa, including business interruption insurers.  Those examinations included focus on both financial matters (so called triennial examinations of insurers – of which well over 50 such examinations were conducted while I was First Deputy Insurance Commissioner) and examinations of specific complaints about insurers (so called Market Conduct Examinations – well over 50 such exams were conducted while I was First Deputy Insurance Commissioner; see the discussion that follows).  The balance of the states use the same Financial Examiners Handbook as Iowa and those states apply the same criteria in judging insurers admitted in their states.  

Market Conduct Examinations of Business Interruption Insurer Claim and Coverage Practices.  Market Conduct Examinations focused on marketplace issues such as those at issue in this case, specifically examining business interruption insurance companies as to compliance with their defense and coverage practices.  Concurrent with such exams, along with the Commissioner, I personally reviewed the final Examination Reports before they were issued.  In addition, in many of these instances, I visited the subject business interruption insurer before the Examination Report was issue, reviewing their effected operations firsthand.  

Prosecution of Business Interruption Insurance Companies.  As First Deputy Insurance Commissioner, I oversaw a full-time team of lawyers who fielded consumer complaints relating to all areas of business interruption insurance company operations.  Indeed, many of these complaints, as well as results of Market Conduct Examinations, resulted in formal action under the state’s Administrative Procedures Act.  From time to time, I served as the Administrative Law Judge, f/k/the Hearing Officer – as to such matters.

  • 20.  Iowa Assistant Attorney General Assigned to the Insurance Department, 1975-1976; serving as the Department’s General Counsel.  As Assistant Attorney General, I had departmental prosecutorial responsibilities for violations of the Insurance Code under the state’s APA act including those committed by business interruption insurance companies.  The Attorney General responsibility also included issuing Attorney General Opinions as to the construction of insurance laws and regulations.  
  • 21.  Legal Counsel to House of Representatives.  As legal counsel to the Iowa House of Representative (1975 session), I provided counsel on all relevant caucus issues and provided the following support:
  • Researched pending legislation, 
  • Prepared memorandums in support of proposed legislation,
  • Provided legal advice, and 
  • Participated in bill drafting, including that relating to business interruption insurance. 
  • 22.  Lecturer at the Bar Review School, authoring and delivering the Insurance Course to students studying for the Iowa Bar Exam (from about 1985- 1991).  I was invited to provide the insurance content review material and lecture for the insurance section of the bar review course in Iowa.  Included in this lecture was extensive law applicable to the interpretation and construction of laws and regulations applicable to business interruption insurance companies, including their underwriting practices.  I authored this material and provided this lecture to students studying to pass the bar for about six years, until accepting the position of President and CEO of NCCI in Florida.  
  • 23.  Chief of Staff:   U.S. Congress.  I served as Chief of Staff at the U.S. Congress in Washington D.C. to an Iowa Congressman for about a year.  Among others, I participated in legislative drafting of insurance and reinsurance legislation.  
  • 24.  Expertise:  Elected Member of the Florida House of Representatives:  Vice Chairman and Member of the Insurance and Banking Committee; Vice Chair of the Civil Justice SubcommitteeIn addition, I have gained background as to insurance policy matters during my service as an elected member of the Florida House of Representatives (elected in 2010 and re-elected in 2012 and 2014 and 2016).  In particular, I served as Vice Chairman and as a member of the House Insurance Committee, whose jurisdiction includes legislative oversight over all of the insurance transactions in the state, including issues relating to among others, policy language and insurer defense and coverage and pricing practices of business interruption insurers and their products.  
  • 25.  Expertise:  Vice Chairman and Past Member of the Florida House Civil Justice SubcommitteeIn addition, I have gained background as to insurance policy matters during my service as an elected member of the Florida House, where in past, I have served as Vice Chairman and as a member of the House Civil Justice Subcommittee, whose jurisdiction includes the law as it relates to insurer good faith (and bad faith) among other related matters.  
  • 26. Insurance Lecturer: Florida State University College of Law.  For a number of years, I have lectured at the Florida State University College of Law’s Insurance Course, providing content as to the Florida Legislature’s insurance legislation along with overall insurance and insurance regulation information.