How to Pursue and Win the Complex Claim: A Guide for Corporate Policyholders

1. How to Pursue and Win the Complex Claim:A Guide for Corporate Policyholders RIMS 2014 Denver, Colorado April 28, 2014 Ty Childress Partner, Jones Day Los Angeles, CA tchildress@jonesday.com (213) 243‐2422 Karen Golden Director, Risk Management & Real Estate Kraft Foods Group, Inc. Northfield, IL karen.golden@kraftfoods.com (847) 646-4362

2. What to Expect • Attendees should hopefully gain valuable insights into how to: • Develop a comprehensive claim strategy that maximizes insurance recoveries in conjunction with a defense of underlying claims; • Manage claims that may implicate multiple parties, coverage years, and types of policies; and • Identify and avoid common pitfalls during the claims process that hamper or delay recovery of insurance benefits.

3. FIRST STEPS AFTER RECEIPT OF A COMPLAINT • Who are the actual defendant(s)? • How does this correlate with insureds listed on the policy and the named insured definition? • Basic risk transfer analysis • Has this risk been transferred via insurance or contractual indemnity? • Are there reasons complicating the risk transfer? • Sensitive contractual relationship with other parties involved? • Policy renewal issues? • Fronting policy issues?

4. IDENTIFICATION AND REVIEW OF POTENTIALLY APPLICABLE POLICIES/CONTRACTS • Often multiple policies implicated • Additional insured coverage • Are there prior, potentially related, claims? • Exposure periods (multiple policy years potentially implicated) • Exposure size (primary, umbrella, excess analysis) • Predecessor entities involved? • Are indemnification obligations implicated?

5. NOTICE ISSUES • Which insurers should be notified? • Notice prejudice/no prejudice jurisdictions • Active versus precautionary notice • Does notice include demand for defense? • Targeted tender issues • What level of information/detail to provide • Characterization of allegations • Information is potentially discoverable in underlying litigation

6. THE INSURERS’ INITIAL RESPONSE • Insurers have statutory obligations regarding timeliness of responses • Adjusters’ good faith obligations • Lay out your expectations • Not all “reservation of rights” are created equal • Insurers with defense obligations have particular obligations • Has the insurer responded for each insured and each policy?

7. DEFENSE ISSUES • Denial of coverage • Likely triggers statute of limitations • Insured is free to protect its own interests • Defense without reservation • Insurer has broad discretion with handling of claim • Defending under reservation of rights • What rights are reserved? • Is potential conflict raised? • Right to independent counsel?

8. DEFENSE COUNSEL ISSUES • Does policy have terms governing selection of counsel? • If potential conflict, can the insured select counsel irrespective of insurer’s views? • What if one implicated policy requires panel counsel and another policy does not? • Hourly rate dispute • Privilege issues

9. UNDERLYING LITIGATION COORDINATION • Coordinate underlying defense with coverage implications • Coverage implications associated with different causes of action • Allegation dates versus coverage dates • Identity of named versus unnamed entities involved • Disclosure of insurance in underlying litigation • Presentations to insurers • Consider scope of use in subsequent proceedings • Privilege issues • Laws vary dramatically by jurisdiction • Is insurer actually “defending” • Budget discussions

10. UNDERLYING SETTLEMENT ISSUES • Notify insurer early and often of settlement status and expectations of participation • Consider pros and cons of insurer attendance at a mediation • What message do you want to send the opposing party? • “Demand within limits” considerations • Settling without the insurer and related consent issues

11. PREPARING FOR COVERAGE LITIGATION • Need to ensure adjusters’ files have all the information you want as evidence • All meetings, communications, efforts thoroughly documented • Show pattern and practice of insurer • Document actual and consequential damages

12. COVERAGE LITIGATION • Procedural/policy requirements • Forum selection issues • Potential stay of litigation • Is underlying case still pending? • Is there a risk of prejudice to the underlying defense? • What relief to seek • Declaratory relief • Breach of contract • Bad faith • Multiple insurers?

13. COVERAGE LITIGATION (cont’d) • Early dispositive motions • Duty to defend usually requires no, or very limited, discovery • Early expert involvement • Critical document discovery • Underlying claims files • Electronic note files • Privilege issues/insurer counsel • Reserves • Reinsurance • Preparing the jury story

14. SETTLING THE COVERAGE CLAIM • Maximizing settlement leverage while underlying claim is still pending • Settlement structures vary dramatically • Claim release • Policy release • Coverage-in-place agreements • Interim funding arrangements • Indemnification • Assignment of claim to underlying plaintiff • Subrogation issues • Primary exhaustion/excess trigger issues

15. AFTER THE CLAIM • Review policy terms and provisions • Problematic endorsements/exclusions • Panel counsel issues • Renewal terms • Review insurer relationship generally • Review contractual relationships with indemnitors/vendors • Review internal performance of team

16. QUESTIONS? • THANK YOU!

17. Contact Information • Ty Childress • Partner, Jones Day • Los Angeles, CA • tchildress@jonesday.com • (213) 243‐2422 • Karen Golden • Director, Risk Management & Real Estate • Kraft Foods Group, Inc. • Northfield, IL • karen.golden@kraftfoods.com • (847) 646-4362