Insurance Journal Midwest readers in 2023 gravitated to stories on multi-million dollar rulings, policy language disputes and failing mutual insurance companies. Readers were also interested in the fallout of the East Palestine, Ohio train derailment and large court settlements.
Top Midwest Insurance Journal Stories of 2023
An October consent order filed with the Minnesota Department of Commerce accused Liberty Mutual of violating several state insurance regulation laws. Liberty Mutual in turn agreed to repay $7.7 million to more than 86,000 Minnesota policyholders. The consent order alleged Liberty Mutual failed to offer the minimum antitheft protection device discount on auto insurance. The insurer also allegedly used an applicant’s status as a residential tenant in offering or establishing multi-policy discounts and applied an automated auto rate increase in violation of state law. Liberty Mutual was given approximately one year from the date of the consent order to refund, credit, or reduce the premium of all impacted policyholders in accordance with the remediation plan approved by the Minnesota Commerce Commissioner.
Geico found itself off the hook from paying a Missouri woman $5.2 million because she said she contracted a sexually transmitted disease in the car of a man who is insured by the company. The Missouri Supreme Court ruled in January to overturn a lower court’s ruling in favor of paying the woman. The Supreme Court unanimously decided that Geico should have had a chance to weigh in sooner and sent the case back to the lower court for further deliberation. The woman notified Geico in 2021 that she planned to seek a $1 million insurance settlement against the man who allegedly gave her an STD. The woman’s partner was covered by a Geico auto policy and an umbrella policy. Geico refused the settlement, saying the woman’s claim did not occur because of normal use of the vehicle.
A dispute over which insurer should pay after a 16-year-old boy borrowed a friend’s car and crashed it into a utility pole reached its way to the Ohio Supreme Court. The driver was insured by Acuity through a policy issued to his father, while the car’s owner was insured by Progressive. The Progressive policy provided liability coverage to drivers not listed on the policy who had permission to use the vehicle, but only if the driver did not have liability coverage through another insurance policy. Since the driver was insured by the Acuity policy because he was a listed member of the vehicle owner’s household, the Ohio Supreme Court ruled that Acuity, not Progressive, had to cover the accident.
2023 marked a challenging year for Midwest mutual insurers, with multiple companies placed into rehabilitation or liquidation or given negative ratings. Kansas’ MutualAid eXchange (MAX) was declared insolvent and forced into liquidation after experiencing consistent underwriting losses, lack of reinsurance, and a declining surplus. Kansas Insurance Commissioner Vicki Schmidt said in an August statement that the “company fell victim to a very tough reinsurance market and catastrophic storms throughout the nation.” Overlard Park-based MAX concentrated on homeowners and farms insurance and provided products to faith-based and mutual aid ministries.
Cameron Mutual Insurance Company was placed into rehabilitation in August, and later liquidation, after experiencing a slow decline in market share. The Cameron, Missouri-based company offered property and casualty insurance, and its lines of business include personal (primarily homeowners and auto coverage), commercial, and farm. The Missouri Department of Commerce and Insurance said the insurer was geographically concentrated in areas impacted repeatedly by severe storms, resulting in major losses in 2023. Cameron Mutual experienced capital erosion in each of the last four calendar years, according to AM Best, eroding surplus by nearly 50%. The company announced it would wind down its insurance operations by non-renewing policies.
A pair of Norfolk Southern train derailments in February led to vastly different fallouts. When a Norfolk Southern train derailed in southeast Michigan on Feb. 16, causing minimal damage to the surrounding area and no injuries, residents were counting their blessings. Less than two weeks prior, a 50-car Norfolk Southern train derailed in East Palestine, Ohio, forcing evacuations and leaving a trail of nearly $400 million in damage. Approximately 72,000 tons of solid waste and 21 million gallons of liquid waste were removed from the crash site and local streams by June, but litigation surrounding the incident is just beginning.
A Nebraska school district agreed in March to pay $1 million to the family of an eighth grader who died after eating a granola bar given to him by a teacher. Jagger Shaw, a 14-year-old student at Liberty Middle School in Papillion, Neb., died last May. Shaw’s father said in a Facebook post that his son got halfway through eating the granola bar and felt like he was starting to have an allergic reaction. Shaw said Jagger went to the school nurse’s office where he was first given the allergy medication, Benadryl. That didn’t help, so the nurse gave Jagger an epinephrine shot with an EpiPen. He was taken by ambulance to a hospital where he died May 7. The school district’s liability insurer will pay the settlement.
One court ruling especially popular for readers came from Ohio, where a Court of Appeals panel said that Nationwide must indemnify a canine owner whose bulldog bit a passer-by, ruling that a policy exclusion barring coverage for bodily injury for a dog with a prior history of attacking or biting did not apply because the bulldog did not have an established history of aggressive behavior. The canine owner held a Nationwide homeowner’s insurance policy at the time his bulldog named Beastro attacked the plaintiff, Benjamin Rolinc on August 2, 2020. Beastro bit Rolinc several times, resulting in injuries and requiring medical attention. A three-person panel found that Nationwide’s dog exclusion does not apply because Beastro’s prior history of biting or attacking was not established as specified in the policy.
An Illinois appellate court ruled that Zurich American Insurance Co. may pursue a subrogation lawsuit against a subcontractor that it says forced it to pay a nearly $3 million builder’s risk claim by designing a defective stormwater detention system during construction of an academic building at a Chicago community college campus. The court found that the contract between City Colleges of Chicago and its design contractor, Moody Nolan, required the college system to be a third-party beneficiary. The court said it didn’t matter that a subcontract between Moody Nolan and Infrastructure Engineering attempted to shield the engineering company from any liability to third parties.
This $75 million jury award out of Missouri caught many readers’ attention. A jury found UPS Inc. must pay a family after a company driver with a known history of drug abuse collided with a pregnant woman’s car, causing her baby to be born with permanent brain damage. In May 2018, Steven Ray Miller was driving a UPS truck when he ran a red light, hitting a car driven by Jodi Pannell, who was 13 weeks pregnant, according to trial testimony. Pannell sought emergency medical treatment and began physical therapy. Her son was born in October 2018 with hypotonia, which is low muscle tone, and was later found to have a permanent brain condition called schizencephaly, The Kansas City Star reported. A Clay County jury found that UPS should pay the family $65 million in damages and $10.3 million in interest. Nuclear verdicts are a key concern for commercial auto insurers.
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