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Risk Insider: Peter Taffae
You Can’t Handle the Truth!
Peter R. Taffae, is managing director of ExecutivePerils, a national wholesale broker. He can be reached at [email protected].
We all remember the famous court scene from “A Few Good Men” when Tom Cruise and Jack Nicholson come to a highly emotional face off on Code Red. Let’s pretend the case is about excess follow form policies; think of Cruise as the Insured and Nicholson as an excess underwriter. It would go like this:
Insured (Cruise): Is your “excess follow form” policy really follow form?
Judge: You DON’T have to answer that question!
Underwriter (Nicholson): I’ll answer that question (looking at Cruise). You want answers?
Insured: I think I’m entitled to…
Underwriter: You want answers?
Insured: I want the truth!
(pause)
Underwriter:
Son, we live in a world that has many excess follow form policies, and those policies come off shelves and are used for all types of insureds. We don’t have the time or the aspiration to match underlying wordings. Who’s gonna to do it? You, Mr. or Ms. Insured?
I have a greater responsibility to my shareholders than you could possibly fathom. You weep for generic excess policies that have their own terms and conditions.
You have the luxury of not knowing what I know. That the death of generic “excess follow form” policies, while fortunate, will result in a lot more claim payments and less litigation between Insureds and insurance companies.
My so-called excess follow form policy, while totally misleading and grotesque, pays my dividends. You don’t want the truth, because deep down in places you don’t talk about you are too busy, and lose interest when it comes to excess policies.
We use words like “exhaustion,” and “arbitration,” that are different than the same words used in the primary policy. We use these words as the backbone of a lifetime of denying claims.
I have neither the time nor the inclination to explain myself to a buyer that questions the status quo; or who questions the quote I provide. I would rather you just look the other way like the industry has done for decades and go on your way.
Otherwise, I suggest you get someone who really knows what they are doing.
Either way, I do not give a damn what you think you are entitled to.
Insured: Do you bind excess policies with different terms?
Underwriter: I prefer to quote on my own excess follow form wording…
Insured: Do you bind excess policies with different terms?
Underwriter: You’re G@ddamn right I do!!!!
A humorous approach to the dialogue that currently has started in the excess D&O, E&O, EPL, Cyber, etc. community.
In Part One- The Problem, we cited the challenges and often devastating results of having different contractual wordings on each layer of a multi-layer program. Qualcomm litigation was an example of a real situation that lead to an unfavorable outcome to the Insured.
Today, we want to share the solution we have developed, and over 15 insurance companies have approved. The policy is called PurX® as in pure excess.
We’re not selling this. PurX is being offered on an open source which will allow all insureds and insurers access to the same wording.
It is a policy that is only 435 words versus the average 1,345-word “excess follow form” policies traditionally used on excess. PurX is a template that allows each underwriter to utilize their Declarations page (this is necessary due to the requirement of listing underlying insurers, claims notification addresses, limit of liability, etc.). PurX leaves the Item number as a fill in.
Most of the underwriting community sees this not only as an opportunity to avoid conflict, but the logical next step in bringing value to its excess layer. It might mean more underwriting, but is a differentiator. It should be noted that not all insureds may qualify for a pure excess.
