September 2, 2025 • 48 mins
Insurance. It’s something we all pay for and hope we never need. But behind the scenes, it’s a world of evolving risks, high-stakes litigation, and technology that’s changing faster than the laws that govern it.
In this episode of the Emerging Litigation Podcast, I interview Jeremy Moseley, partner at Spencer Fane in Denver, Colorado. Jeremy defends mass and class actions involving insurance regulations, healthcare, consumer products, and more. He’s seen firsthand how automation, AI, and climate change are presenting new risks — and he’s here to share what’s coming next.
We talk about how technology that makes claims handling faster and easier is now fueling lawsuits. How customized policies, while great for consumers, can leave dangerous gaps. And how juries today are awarding damages that would’ve seemed outrageous just a few years ago.
Jeremy explains “social inflation” and the rise of thermonuclear verdicts—why $20 million doesn’t sound like much anymore, and how insurers can push back with reality-based defense strategies. He also dives into climate change, shifting storm patterns, and how unprepared infrastructure are creating new underwriting challenges.
And yes, we talk about Dr. Evil, and Ecclesiastes, and my horse Jefferson from a dude ranch vacation in Colorado.
This episode is a warning, a guide, and a conversation about the future of insurance litigation. Jeremy’s insights are sharp, timely, and grounded in real-world experience. If you work in insurance, law, or just want to understand how emerging risks are reshaping the world around us, this one’s for you.
Thanks to Jeremy Moseley for joining us.
Tom Hagy
Host, The Emerging Litigation Podcast
💬 Have thoughts or want to contribute to future episodes? Email: Editor@LitigationConferences.com
Thanks for listening!
If you like what you hear please give us a rating. You'd be amazed at how much that helps.
If you have questions for Tom or would like to participate, you can reach him at Editor@LitigationConferences.com.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Tom Hagy (00:03):
Hello and welcome to the Emerging Litigation Podcast.
I'm your host, Tom Hagy.
If someone were to say to methat the insurance industry
rules the world, I would saythat's absurd, but there are
many aspects of our lives andlet's be positive here for a
moment it goes against mygeneral.
Jeremy Moseley (00:22):
You know my general way.
Tom Hagy (00:23):
There are aspects of our lives that, because
insurance is designed tomitigate our risks, insurance
companies themselves aremotivated to mitigate their
risks and by so doing they oftenmitigate ours.
I don't know if any of thatmakes sense, but I always like
to go to something we're allfamiliar with.
Those are automobiles.
I'm generalizing, but I thinkmost of us anybody listening to
(00:46):
this at least has driven one orseen one.
You might be surprised to learnhow much the insurance industry
has shaped the safety featuresin our cars Over the last 50
years.
Insurers have pushed forseatbelts, airbags, anti-lock
brakes and electronic stabilitycontrol, not just because they
save lives, which is true, butbecause they reduce claims.
(01:09):
Now they've backed crash testscrash test dummies you gotta
love those.
Theft prevention technology andeven those rear view cameras
and parking sensors we rely ontoday and I really rely on those
today.
More recently, they've been bigsupporters of advanced driver
assistance systems likeautomatic emergency braking.
(01:31):
On a personal level, speakingof those things, my car yells at
me.
Yells, is that's kind of astrong.
It beeps at me whenever I crossthe center line and if anyone
were to count, I'd be shockedthat I'm not pulled over for
driving under the influence, atleast once a week, because
apparently I do cross thatcenter line without signaling,
(01:53):
so there's an argument forleaving your signal on
constantly while you're driving.
I just thought of that and I'melderly.
So, and those backup cameras,I'd like to report that whatever
time I spent playing videogames I wasn't huge in that, but
I did play them quite a bit itmade me much better at parking
by camera than my wife, who wasraised by a British lady who
(02:17):
didn't even allow her to watchAmerican TV.
Can you imagine, yeah, I'mtalking to you, shauna.
Can you imagine, yeah, I'mtalking to you, sean.
So, yeah, so we often creditautomakers for these things and
obviously they are innovative,but insurers have been behind a
lot of this.
So today we're going to diveinto the insurance industry and
the ever-evolving risks itinsures.
(02:38):
We'll explore the challengesthey face insuring these things,
the emerging risks we face and,in some instances, the damages
from risk they choose not tocover.
To address these, I had thepleasure of speaking with Jeremy
A Mosley.
He's a partner at Spencer Fanein Denver, in the beautiful
state of Colorado.
Jeremy defends mass actions andclass actions dealing with
(03:01):
insurance regulations, drugs andmedical devices, professional
services and consumer products.
He has been successful inmatters involving insurance, of
course, healthcare,telecommunications and oil and
gas.
Before going into practice, hemediated some 200 settlement
conferences while clerking for afederal magistrate judge.
Jeremy told me that the onlyreason the parties would listen
(03:23):
to him as a clerk is because hewas working for a federal
magistrate judge.
I wish that had worked.
With parenting, jeremy.
I'm not talking about hisparenting, I don't know anything
about that.
Jeremy earned his JD from NotreDame You've heard of it and his
BA from Pensacola ChristianCollege, and both with honors.
(03:44):
I said that I assumed hestudied.
Jeremy confirmed that.
Yes, yes, he did.
And with that, here is JeremyMosley with Spencer Fain.
I hope you enjoy it.
So, jeremy Mosley, thank youvery much for joining me today.
Thank you, tom, I appreciateyou having me.
This is about insurancecoverage litigation.
We're going to talk about AI,climate change and other
(04:06):
emerging risks and, just to open, I'll ask you just two general
questions just to frame thediscussion for us.
So this episode is kind of awarning to insurers.
So what I want to know iswhat's happening right now in
insurance litigation that makesthis message urgent, and how is
technology which is meant tomake insurers and the rest of us
(04:27):
more efficient?
How is it actually creating newlegal risks?
So why don't you talk firstabout the urgency of the message
?
Jeremy Moseley (04:32):
First of all, what we have right now, I would
say, is we really have aconfluence of events that can be
very exciting, but alsoconcerning Technology is
changing rapidly.
So we have advancements with AIthat truly are exciting, but I
believe that we are also seeingsuch an increase in litigation
risk and high verdicts acrossthe board, and also
(04:54):
thermonuclear verdicts occurringat the same time, that insurers
need to take into account asthey evaluate all lines of
business and new products.
There's an ebb and flow tolitigation.
That always happens as certainissues will gain momentum.
We'll see filings across thecountry pick up when an issue
gains traction, and one exampleI'll take right now, for example
(05:16):
, is take the recent juryverdict against Meta finding
violations of California privacylaws on a class-wide basis.
You can expect to see classactions for violations of
digital privacy and related tocompany data collection
practices increase over the nextseveral years against companies
period because of that verdict.
Well, insurers are not immunefrom these data collection
(05:40):
lawsuits.
For example, the state attorneygeneral of Texas sued Allstate
earlier this year, alleging itscompanies were violating Texas
laws in collecting driverlocation and driver behavior
data that it sold to othercompanies and used in setting
insurance rates.
So that's one area where we seetechnology changing rapidly and
(06:02):
we're seeing litigation takeoff and we're going to continue
to see it take off.
Tom Hagy (06:08):
Yeah, it's a wonderful and scary world.
In terms of the data collection, my gosh, the amazing things
you can do with mass dataanalysis and knowing you know.
And in terms of drivers, youknow who's driving recklessly,
who's speeding, who's whatever.
I mean, this is all.
I can see why it's valuable,but you can see where you know
it could be misused.
Talk a bit more about howtechnology, which is meant to
(06:30):
make insurers more efficient,how's it actually creating new
legal risks?
Jeremy Moseley (06:34):
Well, as consumers, we love when
technology works for us.
It saves us time, which in turnsaves us money.
Everything that is done thesame creates efficiency for a
company, which is great, and wesee advertisements, for example,
for being able to take picturesof your car after an accident
and get a check mailed to youfor the damages.
It's amazing.
(06:54):
It saves time.
It's efficient.
You can imagine a computeranalyzing the photos,
determining the damaged piecesand creating an estimate, and
you can do it, as a consumer,all from your phone in a matter
of minutes.
But the more automated theprocess is, the easier it is to
say that all the claims arehandled the same in a class
action, and so we just take asecond.
(07:16):
If we take a second, we canwalk through the process of how
it starts off as a greattechnology and ends up in a
place for a class action.
That creates a risk.
The faster a claim can behandled, the more claims a
single person can handle.
The more claims assigned to asingle person, the larger their
workload.
The larger their workload, theeasier it is to miss something
(07:40):
and the less time they have toaddress a problem if something
goes wrong.
You start off with somethingthat's excellent and is useful
and is a good thing to have, andyou can end up in a situation
where, if the majority of it isall done by a computer and the
person doesn't have enoughinvolvement, you're creating
some legal risks along the way.
That's one example in usingauto.
(08:03):
You can also see this on.
Take, for example, healthinsurance.
There's a lot of class actionsout there against the health
insurance industry for using AIto review medical bills and
review diagnosis codes, and onegood piece of that can be AI can
review medical bills andidentify diagnosis codes to see
(08:24):
whether those diagnoses areactually related to a particular
treatment or whether they'rethings that are wholly unrelated
and can kind of help bring into a reasonable realm treatment.
That should be considered inthe first place, but I think
Cigna has some class actionsagainst it.
Tom Hagy (08:43):
There's a good segue into our first batch of
questions around technologyautomation and class action.
So we're seeing lawsuits overmissed damages and uniform claim
handling, as you've mentioned.
What are plaintiffs reallytargeting in these cases?
How can insurers balanceefficiency with individualized
claim review to avoid litigation, and what checks, balances or
(09:03):
training steps should companiesbuild into automated systems to
reduce exposure?
So start off with the first onewhat are plaintiffs really
targeting in these cases?
Jeremy Moseley (09:12):
Well, I think one thing I'd start with is, as
Ecclesiastes says, there'snothing new under the sun.
What the insurers look at asefficiency, plaintiff lawyers
look at as a way to reduce claimpayments.
That's always going to be theirtheme.
You're just looking to pay less.
What insurers look at as timesaving, even for the customer,
the plaintiff lawyer looks at asa way to just increase profits
(09:35):
for the company.
So they're always looking athow claims are handled the same
way in class actions to showuniform methods and uniform
damages.
Tom Hagy (09:45):
So then how can insurers balance efficiency with
individualized claim review andavoid litigation?
Jeremy Moseley (09:51):
The key is always the human decision making
.
Who has the ultimate say Inclaims handling?
It's the human component.
Is it just overseeing theprocess that's being done almost
primarily by a computer, or arethey actually making the
decision?
How much involvement do theyhave to individualize the
process even slightly so thatyou can demonstrate something
(10:13):
more individualized to avoid aclass action or to demonstrate
early on in the class actionthat class action treatment is
not proper?
Tom Hagy (10:23):
When you're talking to your clients on the insurance
side, what checks, balances ortraining steps do you recommend
they build into automatedsystems to reduce exposure?
Jeremy Moseley (10:31):
You know, the first thing I'd say is most
companies know to do this and tohave these checks and balances
in place, and sometimes it'smore a matter of how well is it
documented in the file oractually put into practice.
So, no matter what theautomation is that is used,
first and foremost it isemphasizing its role in the
claims process with the adjuster.
(10:52):
So normally, where this comesup in the first place is there's
a challenge to the automatedprocess.
You know I'm obviously on thelitigation side.
You're dealing with someone whowas upset with something that
went wrong.
So what was that challenge?
And did they provide some basisfor why they're saying it
should have been handleddifferently than just what an
(11:14):
automated result would have beengiven with a human review?
And so the emphasis needs to bethat, whatever that automated
process is, it's a tool toassist an adjuster in making a
final decision, and it's onething to say it and to say that
the adjuster has that finaldecision, but it's another to
really empower the adjuster withthe ownership of a file.
(11:34):
Does the adjuster ever actuallydeviate from that tool?
And the balance that needs tobe created is the balance
between the consistency thatinsurers want across the board
and how they handle claims withthe autonomy that they want to
give the adjuster in makingdecisions.
A very common phrase in theinsurance industry is that each
(11:58):
claim is adjusted on its ownmerits.
Well, putting that intopractice means being able then
to let that adjuster have thatautonomy where they can actually
, when documented in the claimfile document what decision they
made to deviate from the tool,if you will and that can be
(12:19):
documenting why they followedthe tool and documenting why
they did not follow the tool,but that documentation then
allows us to demonstrate in thelitigation why class action
treatment is not appropriate.
Another thing that can behelpful when we're talking about
an automated process is when itinvolves the consumer.
(12:42):
A lot of these processes arebehind the scenes, but when
we're dealing with an automatedprocess that involves the
consumer, a lot of theseprocesses are behind the scenes.
But when we're dealing with anautomated process that involves
the consumer like they're goingto take photos and upload it
through an app is to use consentlanguage and to actually, in
the app, have things thatthey're clicking on, that they
agree that this is how they'regoing to start their claim, or
(13:04):
the steps they're going to takein the claim.
So, just like going back to thebeginning, when we talked about
data privacy and datacollection lawsuits, one of the
big things that is going to beused to prevent those in the
future is going to be how goodis your consent language?
It's the same thing here howusing consent language up front
so that the insured is agreeingthat this is the process that
(13:27):
they're using and they'vedecided to do their claim or
start their claim this way, is agood way to put things in place
that they're recognizing.
They could have called theadjuster, they could have gone
to a body shop, but they'vedecided to go this way.
That's faster for them, fortheir own convenience, as a way
(13:47):
to.
It's not going to stop.
Nothing can stop someone fromsuing later, right, but it at
least starts a good process orrisk way of minimizing risk up
front if you had themacknowledge that they are
consenting to starting theprocess this way.
Tom Hagy (14:08):
Yeah, so we've got consumers posting or sending
their uploads of their damagedcar.
So have we already had AIdamage your car for you in your
claim and submitting your carsall bashed up like it was in
Grand Theft Auto or something.
Has that happened?
Jeremy Moseley (14:29):
We don't know Not to my knowledge but I think
what one of the things youstarted with was the missed
damage, and I think what you're.
We're going to unpack that forjust a moment.
What's underlying that is thatyou've got a situation of the
photos are uploaded.
The first level of review isgoing to be some level of damage
that can be seen from thosephotos.
Somebody gets their check andgoes on about their life and
(14:51):
let's say it's not that major ofdamage so they don't bother to
actually take it in and get itrepaired.
But the reality is, if they hadgone to a shop, maybe some human
reviewing that would havenoticed more damage and they
would have written a moredetailed estimate and it would
have paid out more money.
And so the theory of liabilityis you have this process in
(15:13):
place because people will gothis faster route and then you
will write a check.
That is a smaller check andwhat was intended to be and is a
great time-saving method forthe consumer because they can
take these pictures, get astarting estimate and get paid
immediately the plaintiff'slawyer turns into no, you're
doing this to save money,because you don't want to
(15:35):
actually write larger checks.
That's the theory of liabilityin the lawsuit, but the reality
is most people just want tosubmit their basic damage and
only if they feel like gettingit repaired do they want to take
the time to go into a shop andactually get the more detailed
estimate and fully get paid thecost of a full repair when
they're actually getting itrepaired.
Tom Hagy (15:57):
I'm just imagining there'll be a time when there
are just sensors all over a car,you can say this busted the
fuel pipe, or whatever, thisbusted the muffler.
You know, I mean, it's alreadyjudging, it's already measuring
other things.
Jeremy Moseley (16:10):
That's probably true At some point.
You know they'll be able tojust get an upload from the car
sensors for a couple of thedamage as well.
Tom Hagy (16:19):
Yeah, yeah, that could be handy in a lot of ways.
Jeremy Moseley (16:22):
By then, the cost of our cars will be also
significant as well.
Tom Hagy (16:27):
Right, yeah, that's true, and I also want to give
you credit.
This is the first mention ofEcclesiastes on the podcast.
I think we had Deuteronomy once.
I think I brought that up.
Next, the customization ofinsurance policies.
And here we're.
You know, we've heard of theseclaims lawsuits claiming I
didn't know I needed it and youdidn't tell me well enough.
(16:49):
How is the push for morecustomized insurance products
driving litigation risk?
You've touched on it a bit needto choose to close to protect
themselves, and how can carriersdesign policies that meet
customer needs without creatingliability for what's left out?
So take the first one how isthe push for more customized
(17:12):
insurance products drivinglitigation risk?
Jeremy Moseley (17:15):
Well, customers are always looking for choices
and technology allows carriersto customize policies like never
before.
The reality is, insurance issomething you pay for and hope
you never actually need.
So for auto coverage, moststates mandate fairly low limits
, usually focused on liabilitycoverage, and for homeowners
coverage, the mortgage companyonly cares about whether the
(17:37):
mortgage amount is covered.
These are relatively minimalstandards.
For example, no state, andreally no one, mandates life
insurance, even though it's avery good thing to have.
So litigation risk I seeoccurring in two ways.
First, as you said, you haveinsurance claiming after the
fact that they would havepurchased that coverage if the
(17:58):
carrier offered it more clearlyor explained it better.
So the more customization youhave, the more potential for
gaps in coverage.
You have Gaps.
The customer chose up frontwhen what they really cared
about was a lower premium, butnow they wish they had that
coverage.
What they really cared aboutwas the lower premium, but now
they wish they had that coverage.
(18:18):
Second, the more customizationyou have on the front end, the
higher the chance you have ofnot identifying the correct
coverages on the claims floor.
When policy coverages areuniform, adjusters step into
every claim, at least knowingwhat coverages are available and
potential damages to evaluatefor a given state, and
previously there were relativelyfew coverages that might change
, like whether someone hascomprehensive and collision
coverage for auto, for example.
(18:39):
But the more coverages thatmight change like whether you've
got a long list of differentendorsements the more the
adjuster has to make sure theyhave those coverages and
benefits accurate when they'readjusting a claim.
Now, this is not an entirelynew phenomenon there, like I
(19:00):
said, have been some level ofcustomization before but it's
certainly an area I've seenlitigation in previously, for
years, and so with more, withthis push for more customization
, I expect to see an increase inlitigation in this area to
match it as well.
Tom Hagy (19:20):
Okay, so talk about then the communication or
disclosure gaps insurers need toclose to protect themselves.
Jeremy Moseley (19:27):
This is an area where I think technology can
really benefit the insurer,though it might take some data
storage to do it.
So some states do have specificdisclosure forms for certain
coverages you have to provide aninsured, so you already know
what you have to tell them forthose certain coverages, but
other states don't.
Now, if this is online, forexample, one option would be to
(19:51):
record what pages the insuredhas been shown and what your
disclosure boxes show what theyactually had to click on for the
disclosure to move on, whetherthey accepted the coverage or
not that they had to accept thisdisclosure.
Well, save that disclosure inthe application application.
(20:13):
If you're doing this on thephone, record the disclosures,
whether that means you played adisclosure that was a phone
recording to them, or whetherit's a disclosure that's read by
the agent or policy serviceswho's you know working with them
to determine what coveragesthey're going to determine in
their customization that theywant.
If it's through an agent youknow, include those disclosures
in an application.
(20:34):
I think most of this beingdriven by e-commerce means that
the reality is we're talkingabout this being done online
most of the time, and that givesthe insurers a lot of
flexibility to create someexcellent disclosure boxes,
acceptance screens and thingslike that, that they can have
adequate disclosures and thensave.
That is really the key ismaking sure that the technology
(20:56):
that they've used then allowsthem to save what the insured
saw and clicked on and agreed toon the back end so that they
have it for later when or ifthere's a challenge.
Now you can never reduce riskto zero, of course, but so you
still have the potential.
Someone will allege that thedisclosure they read wasn't good
(21:18):
enough.
That won't go away, but havingthat backstop of here's the
disclosures that were providedand that they clicked on is a
big difference If you're goingto allow that customization to
be able to show they did haveall these options.
And here's everything that theyselected and chose not to
(21:38):
accept at the time.
Tom Hagy (21:40):
Lastly, how can carriers design policies to meet
customer needs without creatingliability for what's left out?
Jeremy Moseley (21:46):
There are a lot of good policies out there with
good options.
What I would say is documentingyour disclosure really is the
key, even when it's not requiredby state law.
That is the best way tomitigate litigation risk.
I handle litigation frequentlywhere we are addressing the fact
that a particular disclosurewas not required by state law
(22:07):
and it is one of the elementsand a factor against the
plaintiff's claims, but it isnot always dispositive,
particularly early in thelitigation, depending on state
law.
So the difference betweenwinning on summary judgment at
the end of discovery and tryingto avoid being sued in the first
place is that kind ofdisclosure that, just because
(22:29):
you're not required to have itunder state law, it can be a
good practice to have in place.
Tom Hagy (22:35):
So let's move on to social inflation and nuclear
verdicts, or thermonuclearverdicts as you call them.
So this is social inflation isshifting how juries think about
damages.
So why aren't nuclear verdictsless surprising today than they
used to be, or why are they moreprevalent?
What can insurers and defenseteams do to counteract juror
(22:57):
bias and changing culturalexpectations around compensation
, and are there proactive stepsbeyond litigation that insurers
can take to address this trend?
So let's take the first oneFirst.
If you could just describe whatis meant by social inflation
and why are nuclear verdictsmore prevalent?
Jeremy Moseley (23:16):
Social inflation refers to the fact that
everything costs more, and thisidea that numbers are just
larger and that when we go tolook at verdicts these days and
we look at the cost associatedwith litigation and what
injuries are awarding, thenumbers are just larger than
(23:38):
they've been in the last fewyears.
That's a trend that we seeperiod and the reality is that
is a trend that's been here fora few years and, in my opinion,
it's not going away.
Here's what I would start with.
I would start with how we talkabout money in the media.
When we talk about money now,we talk about billionaires.
(24:01):
When we talk about rich people,we don't talk about
millionaires.
When we talk about our nationaldebt, we talk about it in the
trillions and in fact, even whenwe've been talking about our
deficit just our nationaldeficit, our annual budget
deficit year over year that isin the trillions.
(24:22):
And recently we've been talkingabout if you listen to in the
news the largest companies andwhat their market cap is.
Even that is now in thetrillions, and it was just a few
years ago when the firstcompany to break into the
trillions for a market cap wasmaking news.
So in just the last few years,we've really changed the way we
(24:44):
talk in the news about money andso, therefore, what people are
hearing, what jurors are hearingabout, how we talk about money,
has changed significantly.
If we want to talk five yearsago pre-COVID and post-COVID our
concept in terms of just anational discussion of money is
(25:05):
different, and I'll give you anexample of what I believe here
is going to be just agenerational shift in what we
see for verdicts and money goingforward.
In that context, when I firststarted practicing law, I was
talking to a senior partnerabout a case and we were talking
(25:25):
about discovery and what wascoming up and some issues.
And he said to me you know,that is the $64,000 question.
And I looked at him.
I had no idea what he wastalking about.
He had to explain to me thatthere was a game show from
before I was paying attention toTV, although was a game show
(25:49):
where that was the big questionand you got $64,000 for getting
it right.
So, to give you an idea, I wentand looked this up.
The game show who Wants to Be aMillionaire debuted in 1999, 26
years ago and at the time theidea of winning a million
dollars was a pretty big deal.
(26:10):
Well, today that would not besuch a big deal to a lot of
people to only get a milliondollars, if you will.
That's kind of where we are nowI think, oh, I don't know.
I mean, I would be very happyif you want to give me a million
dollars.
Tom Hagy (26:28):
I wouldn't get out of bed for less than a billion.
No, I got you.
Yeah, it's definitely different.
Jeremy Moseley (26:34):
And here's the other thing with inflation since
COVID, we talk now about howinflation has calmed down.
We're, you know, finally incontrol of inflation, but we do
so in terms of inflation yearover year, and so what that
means is we still have higherprices.
They're just not continuing togo up as much.
(26:54):
And even if we were to returnto some lower prices on things,
we're talking about a new normal, and that has desensitized
people to higher costs and to adiscussion of money, and the
bottom line is this $20 millionof someone else's money doesn't
(27:19):
seem like that much.
Tom Hagy (27:20):
Now, when you look at, I couldn't help but think about
CEO pay and professionalathlete pay.
You know, when you hear some ofthese contracts that they get
and a CEO will I don't know,maybe the company went bankrupt
or had all kinds of problems andthe CEO drops out, but they
still get like $50 million orsomething.
Yeah, you get used to hearingthat.
(27:41):
In terms of you know, guidance,what could insurers and defense
teams do to counteract jurorbias and changing cultural
expectations around compensation?
Jeremy Moseley (27:53):
juror bias and changing cultural expectations
around compensation.
You know lawyers talk a lotabout anchoring in a trial and
plaintiff lawyers refer toanchoring and they'll talk about
, you know, large numbers toanchor to things like priceless
art, public works projects orfighter jets and items that are
in the billions of dollars, andthey'll ask for damages in the
hundreds of millions, if notbillions, of dollars.
(28:15):
To anchor to something you knowvery significant and that's one
of the reasons that we seethese thermonuclear verdicts is
anchoring to numbers that are sosignificant, and there are
several studies out there abouthow defense lawyers need to be
doing the same thing in reverse.
They call it reverse anchoringor providing a defensive anchor,
and I agree, but I call it areality check.
(28:38):
Often the plaintiff lawyers aretalking about these
ridiculously high numbers andthey're not tied to anything to
do with the case, and what thedefense needs to do is provide a
reality check and tie it to theactual case, tie it to things
that matter and that the jurycan relate to in relationship to
(29:01):
whatever is going on in theactual case.
Take, for example, a plaintiffasking for $20 million in bad
faith damages if you're talkingabout a bad faith insurance case
against an insurer in Texas,for example, in Dallas, texas.
The average annual wage inDallas I looked it up is $66,500
(29:23):
.
Well, what they're asking for,if we're talking about
non-economic bad faith damagesof $20 million, is the
equivalent of 300 years of theaverage annual earnings.
That's the kind of conceptsthat need to be tied to reality
(29:43):
to get a jury to understand.
When we talk about $20 millionof someone else's money, let's
tie this down to reality.
What was this plaintiffactually making as an average
worker?
If that's what they were making, 300 years of wages.
If we're talking about aninsurance case, what was the
policy coverage?
(30:04):
Was it a property policy or anauto policy?
What was the policy limit?
You know, how many times thepolicy limit are they now asking
for.
Is it 20 times, 50 times thepolicy limit that they're now
asking for?
Tie it to things that areactually relevant to this case
to demonstrate how high andridiculous the number they're
(30:24):
now asking for is.
Another example is you know fora punitive damage award?
I saw last year In that contextfor punitive damages we're
talking about.
We're past the compensatorydamages, right, so you've
already awarded a lot of damagesor, if you will, all the
(30:45):
damages they think the plaintiffis entitled to for compensation
.
In Nevada State Court lastsummer actually just last year
in August a jury entered apunitive damage award against
Progressive for $100 million.
That did get reduced by thejudge after trial but in terms
of in front of the jury, whatwas being asked for and what
they awarded was $100 million.
(31:05):
Well, if you take the averagepremium, auto insurance is
expensive in Nevada.
Premium auto insurance isexpensive in Nevada.
So if you take the averagepremium of, say, $2,400 for a
year, that would take over41,000 insureds to pay that
(31:26):
award.
That's the kind of tying it toreality when you're saying
punish this company, they'reasking for the premiums of
41,000 insureds to be paid tothat plaintiff.
Tom Hagy (31:34):
Competitive damages obviously has a different
purpose.
It's supposed to have adeterrent effect.
Jeremy Moseley (31:39):
Yeah, it is, and that's why I think you can
directly get into things likethe premiums that are being
asked for and the impact it willhave on other insurers as well?
Tom Hagy (31:54):
And so what about the proactive steps, beyond
litigation, that insurers cantake to address the trend of
these nuclear verdicts?
Jeremy Moseley (32:01):
I would say there are three things that
insurers can look at clearverdicts.
I would say there are threethings that insurers can look at
.
The first and foremost is tortreform in the legislatures.
Obviously, these outlandishverdicts don't help consumers.
They raise the premiums foreveryone and the way to get
control of those is tort reform.
That is kind of the main way torein that in.
(32:23):
The second, I would say, isrisk management, both internally
and with corporate insurers fortheir liability claims, having
a greater focus on whateversafety programs.
That's obviously an area thatinsurers focus on with their
corporations, their corporateinsurers anyway.
But first and foremost that'swhat it often comes back to for
(32:45):
these large verdicts is what wasthe safety program in place and
why it wasn't sufficient.
And that has to be and can be aplace to not only focus on but
make sure that the corporateinsurers understand that they
are going to need to focus onthat as a high priority to avoid
these verdicts being enteredagainst them as well.
That was second and third.
(33:09):
I think it's an issue of socialchange.
The reality is society tends tobe on a pendulum and we really
have swung to the side thatlarge corporations in general
are evil and need to be punished.
That's just where we are rightnow.
It seems all companies,including insurers, can be
working to change that and itdoesn't happen overnight.
(33:31):
But as we kind of started offtalking about with this section
about social inflation, thediscussion about the
billion-dollar companies, thebillion-dollar CEOs, that
mindset that underlies thethermonuclear verdicts.
It ties into this A lot of largecompanies.
What are companies doing toshow that they're a part of the
(33:54):
company and that they're goodneighbors?
I think one of the things thathappened as well is a lot of
large companies waded into whatyou might call the culture war
in the last few years, whichended up being very polarizing,
and I think that had a negativeimpact on a lot of companies.
(34:16):
And it's very tricky becauseconsumers expect them to show
their good neighbors and nowthey have to figure out how to
get out of being involved insocial issues that are
polarizing.
So I don't have the answer tothat.
Tom Hagy (34:34):
I think we're all dancing through torches.
It's a super tricky time.
Jeremy Moseley (34:42):
I think that's the issue is being able to show
that they are part of acommunity, that they are good
neighbors, and yet doing so in away that reaches everyone and
isn't in the middle of acontroversy.
So it is not an easy thing todo by any means, but that's the
way to try to show that they aresocially part of a good
community.
Tom Hagy (35:03):
Yeah, yeah, yeah, I mean throwing in my own as a
policyholder.
I think one of the best thingswell, this would be for, like,
consumer level but one of thebest things are the agents.
I've had the same agent foralmost 40 years, steve DiIorio.
He still sends me ice cream onmy birthday, I mean.
(35:23):
And when we have conversationshe takes time, asks on my
birthday, I mean, and when wehave conversations he takes time
, asks about my kid.
I mean it's just, we're notfriends.
I mean we don't go out and youknow have, well, we're both half
Italian.
I was going to say we don't goout and have calzones, but well,
he's all Italian.
Pardon me, nevermind, I digress, but but anyway, it's's like
when I think about thatinsurance company, I don't think
(35:45):
about a corporation, I thinkabout him, you know.
I mean I had an accident.
It's funny.
My office was in his building.
I had an accident right infront of his office with another
one of his policyholders and weboth.
It was resolved before the endof the day.
You know what I mean.
It was just like, okay, thishappens.
But you know, and that's thingsyou know.
(36:05):
I covered insurance for manyyears and you know when
insurance companies canadequately forecast and have
adequate reserves for the risks.
That's one thing.
Things go very smoothly.
But, as you know, like in masstorts, I covered for years
environmental coverage,litigation and insurance
companies did not see thatcoming.
(36:27):
Nobody saw it coming.
A super fund came in andsuddenly, oh my gosh, right, and
that fight is still going on.
And I don't know how manystories I wrote about the
pollution exclusion, but it waseasily hundreds.
But anyway, back to my point isthat's one thing they have in
their arsenal are their agents.
(36:48):
But you also mentioned you usedthe word evil and it made me
think of two things.
One I believe for years I don'tknow if it's still the case,
but in Arizona, I believe, thestandard for proving bad faith
on the part of an insurer, youhad to prove that they had evil
intent.
Now I don't know if that'sstill true or not, but that was
(37:09):
in the 90s, I think, when I waswriting about it.
So I'm going to look it up andsee if evil is still the
standard.
The other thing I thought aboutwas Dr Evil.
When you talk about you knowhe's holding the planet hostage
for a million dollars.
Everybody looked at him.
It's like no, no, a billion.
It's keep going up.
(37:29):
There's some inflation rightthere.
Jeremy Moseley (37:31):
You're right and I guess you know.
If that were to be made today,he would have to say $1 trillion
, he would Yep.
Tom Hagy (37:37):
You're right.
You know you're right Because Ithink he just upped it to
billions.
So yeah, I don't know what'safter trillion.
Should I know Quadrillion?
Is that right?
Okay, I'll take that.
Climate change and riskmodeling I mean you talked about
diving into social issues.
(37:57):
It's funny how climate changeis almost a social issue too.
It's debatable.
Almost a social issue too, it'slike it's debatable.
But climate change is thethings I want to address is, you
know, it's reshapingunderwriting models.
How are catastrophic eventschanging the loss profile for
insurers?
Why don't you go ahead and takethat one first?
Jeremy Moseley (38:17):
What we're seeing, first of all, are a lot
of storms and catastrophicevents that are 50-year events
or 100-year events, but they'rehappening more often than that.
So the increase in frequency ischanging the risk.
And second, we're seeing ashift in location.
For example, I grew up inKansas in Tornado Alley, and
part of what that means is Iknew what was coming and we
(38:41):
heard the sirens.
So first of all, we had sirensthat went off regularly to test
at noon on Wednesday duringtornado season.
We knew how to prepare and weknew what to expect.
The other thing is it's Kansas,so there's not a lot of people.
So tornadoes can tear through alot of places and you know,
didn't do a lot of damage, otherthan I do recognize that they
(39:03):
could damage crops and thatcould be taken care of through
crop insurance and underwrittenfor it as well.
But now we see a shift and wesee those storms hitting
different areas and strikingfarther east, including
tornadoes that are strikingfarther east, including Middle
Tennessee.
In fact, I was just reading ameteorologist in Nashville
(39:25):
posted last month tornado alleyis shifting.
We have already seen 27tornadoes in middle Tennessee
this year.
Wow, that's the kind of changethat we're seeing where storms
have moved because of climatechange, and so these
catastrophic events or stormsthat may have been normal, if
(39:45):
you will, for certain areas ofthe country are moving and now
they're hitting a differentlocation.
Tom Hagy (39:50):
Yeah, Growing up in Ohio, even though that's not
quite Kansas, but we still hadtornadoes, especially in the
middle part of the state.
It was very flat and, yeah, thesirens.
You know, you knew ahead oftime and you knew where to go.
Get out of the way, get undersomething sturdy.
The good news about tornadoesat least they tend to be over
quickly so you can get into asafe room.
(40:13):
But you won't be there for aweek.
You just have to be there for aweek.
But man, the devastation isjust.
You can't believe it until yousee it happen, it's true.
Jeremy Moseley (40:22):
And another thing with intensity, as the
intensity grows, that changesthe devastation they can cause.
Because my understanding istypically a tornado, when it
hits a heat center, it spins off, and that's why they often
don't go through cities, is itwould hit that heat and it would
go around the city because ofthe heat generated by a city.
(40:43):
But when they're a lot moreintense, they don't get spun off
by the heat of the city and sothen they'll go through a city.
So when you have a muchstronger storm and a much
stronger tornado that's whythose are have one that can
actually go into a city and gothrough a city and cause more
devastation as well.
Tom Hagy (41:12):
So what happened?
You mentioned Kansas not beingdensely populated, which must be
nice I'd like to visit once ina while.
I'd like to go from New York toKansas and back, just so I can
have a little bit of both.
But what happens whenpopulation growth and unprepared
infrastructure collide withclimate-related risks?
(41:34):
Because we're seeing not onlystorms, but you're also seeing
that infrastructure isn'tnecessarily built for extreme
temperatures and other events.
So what happens?
Jeremy Moseley (41:49):
I think, overall , what we have is an unprepared
risk model.
You have insurers who've beenunderwriting for, like I said,
tornadoes in Kansas for decades.
But what about Tennessee?
You have a population that isnot necessarily as prepared and,
as you mentioned, a differentinfrastructure as well, and you
have an infrastructure that isprepared for one set of events
(42:12):
and is not prepared for one, thehigh heat and things that we're
seeing and two, the storms orevents that have shifted to a
different area.
So, as climate change not onlybrings these more severe storms,
the shift in where the stormsare located creates a different
underwriting.
So, as climate change not onlybrings these more severe storms,
the shift in where the stormsare located creates a different
underwriting risk for the future, because the damages are
occurring in a location and to apopulation that, historically,
(42:34):
is not necessarily as preparedfor that risk in the first place
.
Tom Hagy (42:38):
Well, how are premium bases and risk development
strategies evolving, and whatdoes that mean for litigation?
Jeremy Moseley (42:44):
First of all, talking about premiums, this is
what actuaries do and I imaginethe question is can they do it
fast enough and accuratelyenough when the weather in many
ways appears to be sounpredictable?
But one challenge as well isthat state regulators control
premium increases, and premiumchanges, therefore, are very
(43:04):
reactionary.
So while insurers may predictthese risks and these shifts,
until losses actually increasein an area, I expect they'll
have significant resistance toincreasing premiums for the new
risk pool until existing lossessupport that change.
So for the second thing youasked about related to
litigation, some states havespecific laws that address these
(43:27):
kinds of risks and some statesdon't.
So as the risks shift, Ianticipate we'll see the
litigation shift to new states,and I'll give you an example.
Litigation, of course, oftenfollows catastrophic events, but
in Colorado, after the 2012wildfires, we saw a number of
law firms from Texas and Floridamove into Colorado and open
(43:52):
offices here, and it wasn't justthat you have more lawyers here
to help those who had homesdamaged.
We saw an increase in both theclaims practices and litigation
practices for how claims hadbeen handled and litigated in
Florida and Texas, which wasvery different from how claims
(44:13):
were handled and litigated inColorado prior to that.
So those are some of the thingsI think you'll see.
Shift and change as well isthat, as a pattern of storms and
shift, you will see thosechanges in litigation follow,
where it will also be the claimspractices that will follow from
(44:38):
state to state, which will thenincrease litigation as well.
Tom Hagy (44:41):
If you could leave insurers or other listeners here
with a one key warning, or twoor a call to action, what would
it be?
Jeremy Moseley (44:48):
The first thing I'd say I think is really a
warning, or, if you will, that,as I said earlier, I believe we
are at the front end of agenerational shift in litigation
that we may be labeling in partas social inflation, but it is
really here to stay.
So there was a period afterCOVID where verdicts went high
(45:12):
and there was a thought thatthis is just some pent-up anger
and aggression related to beingin our house for too long, and
verdicts did go back down alittle bit after that, but
overall for damages.
(45:32):
I think we're seeing a lot ofverdicts that are going to stay
high across the board and thatthere needs to be a recognition
that, because of inflationoverall and because, as I said,
the way we talk about money haschanged so much that verdicts,
generally speaking, are going tobe essentially a different
level across the board than theywere pre-COVID, and that this
(45:52):
is, as I said, a generationalshift in how we look at money
and what we can expect to see inverdicts going forward.
Tom Hagy (45:59):
So what do you think is going to be next?
What's the next major wave ofinsurance litigation?
Do you see?
Jeremy Moseley (46:03):
I think it's already there in other areas and
I think it's coming to insurersnext, and I really do think
it's going to be data-driven.
I think it's going to becollection and the use of data.
So, while it's mostly againstother companies right now, I
expect class action lawyers willkeep working on ways to come
after insurance companies nextwith how insurance companies use
(46:25):
all the data they have, becausethe reality is, insurance
companies have a whole lot ofdata, and so it's a matter of
the class action lawyers lookingfor how can they turn that into
a good class action.
Tom Hagy (46:40):
The only question I have is now.
You've mentioned COVID as beingthe pandemic being over.
I've been in my apartment sinceMarch of 2020.
I'm not up on the news.
I don't know if anything'shappened since then.
Jeremy Moseley (46:51):
I'm just saying that I think you're allowed to
come out now if you'd like to.
You want to is another story.
Tom Hagy (46:57):
Is that legal advice?
Okay, yeah, that's true, that'strue.
But Colorado is a beautifulplace to come visit.
I love Colorado, so I'll haveto stop there again someday,
maybe find Jefferson, maybe ridemy horse.
Well, jeremy Mosley, thank youvery much for talking with me
about this today.
I appreciate it.
Thank you, tom, I appreciatethe opportunity.
Yeah, my horse, jefferson.
(47:21):
That was a reference.
I had been talking to Jeremybefore we started recording
about the best family vacation Iever had.
Our girls were 8 and 10.
They're now in their 30s, butit was a dude ranch in Lyons,
colorado.
It was a great time Fly fishing.
They assigned you a horse.
My horse's name was Jeffersonand he was quite in charge, but
(47:42):
that's why I mentioned that, andso I want to thank Jeremy
Mosley for speaking with metoday.
He is partner at Spencer Fanein Denver, colorado.
I appreciate him sharing hisinsights.
Hey, if you want to reach me,want to work together or just
complain, my contact informationis in the show notes.
Also, if you have a minute,give us a rating.
Thanks for listening.
Hello and welcome to the Emerging Litigation Podcast.
I'm your host, Tom Hagy.
If someone were to say to methat the insurance industry
rules the world, I would saythat's absurd, but there are
many aspects of our lives andlet's be positive here for a
moment it goes against mygeneral.
Jeremy Moseley (00:22):
You know my general way.
Tom Hagy (00:23):
There are aspects of our lives that, because
insurance is designed tomitigate our risks, insurance
companies themselves aremotivated to mitigate their
risks and by so doing they oftenmitigate ours.
I don't know if any of thatmakes sense, but I always like
to go to something we're allfamiliar with.
Those are automobiles.
I'm generalizing, but I thinkmost of us anybody listening to
(00:46):
this at least has driven one orseen one.
You might be surprised to learnhow much the insurance industry
has shaped the safety featuresin our cars Over the last 50
years.
Insurers have pushed forseatbelts, airbags, anti-lock
brakes and electronic stabilitycontrol, not just because they
save lives, which is true, butbecause they reduce claims.
(01:09):
Now they've backed crash testscrash test dummies you gotta
love those.
Theft prevention technology andeven those rear view cameras
and parking sensors we rely ontoday and I really rely on those
today.
More recently, they've been bigsupporters of advanced driver
assistance systems likeautomatic emergency braking.
(01:31):
On a personal level, speakingof those things, my car yells at
me.
Yells, is that's kind of astrong.
It beeps at me whenever I crossthe center line and if anyone
were to count, I'd be shockedthat I'm not pulled over for
driving under the influence, atleast once a week, because
apparently I do cross thatcenter line without signaling,
(01:53):
so there's an argument forleaving your signal on
constantly while you're driving.
I just thought of that and I'melderly.
So, and those backup cameras,I'd like to report that whatever
time I spent playing videogames I wasn't huge in that, but
I did play them quite a bit itmade me much better at parking
by camera than my wife, who wasraised by a British lady who
(02:17):
didn't even allow her to watchAmerican TV.
Can you imagine, yeah, I'mtalking to you, shauna.
Can you imagine, yeah, I'mtalking to you, sean.
So, yeah, so we often creditautomakers for these things and
obviously they are innovative,but insurers have been behind a
lot of this.
So today we're going to diveinto the insurance industry and
the ever-evolving risks itinsures.
(02:38):
We'll explore the challengesthey face insuring these things,
the emerging risks we face and,in some instances, the damages
from risk they choose not tocover.
To address these, I had thepleasure of speaking with Jeremy
A Mosley.
He's a partner at Spencer Fanein Denver, in the beautiful
state of Colorado.
Jeremy defends mass actions andclass actions dealing with
(03:01):
insurance regulations, drugs andmedical devices, professional
services and consumer products.
He has been successful inmatters involving insurance, of
course, healthcare,telecommunications and oil and
gas.
Before going into practice, hemediated some 200 settlement
conferences while clerking for afederal magistrate judge.
Jeremy told me that the onlyreason the parties would listen
(03:23):
to him as a clerk is because hewas working for a federal
magistrate judge.
I wish that had worked.
With parenting, jeremy.
I'm not talking about hisparenting, I don't know anything
about that.
Jeremy earned his JD from NotreDame You've heard of it and his
BA from Pensacola ChristianCollege, and both with honors.
(03:44):
I said that I assumed hestudied.
Jeremy confirmed that.
Yes, yes, he did.
And with that, here is JeremyMosley with Spencer Fain.
I hope you enjoy it.
So, jeremy Mosley, thank youvery much for joining me today.
Thank you, tom, I appreciateyou having me.
This is about insurancecoverage litigation.
We're going to talk about AI,climate change and other
(04:06):
emerging risks and, just to open, I'll ask you just two general
questions just to frame thediscussion for us.
So this episode is kind of awarning to insurers.
So what I want to know iswhat's happening right now in
insurance litigation that makesthis message urgent, and how is
technology which is meant tomake insurers and the rest of us
(04:27):
more efficient?
How is it actually creating newlegal risks?
So why don't you talk firstabout the urgency of the message
?
Jeremy Moseley (04:32):
First of all, what we have right now, I would
say, is we really have aconfluence of events that can be
very exciting, but alsoconcerning Technology is
changing rapidly.
So we have advancements with AIthat truly are exciting, but I
believe that we are also seeingsuch an increase in litigation
risk and high verdicts acrossthe board, and also
(04:54):
thermonuclear verdicts occurringat the same time, that insurers
need to take into account asthey evaluate all lines of
business and new products.
There's an ebb and flow tolitigation.
That always happens as certainissues will gain momentum.
We'll see filings across thecountry pick up when an issue
gains traction, and one exampleI'll take right now, for example
(05:16):
, is take the recent juryverdict against Meta finding
violations of California privacylaws on a class-wide basis.
You can expect to see classactions for violations of
digital privacy and related tocompany data collection
practices increase over the nextseveral years against companies
period because of that verdict.
Well, insurers are not immunefrom these data collection
(05:40):
lawsuits.
For example, the state attorneygeneral of Texas sued Allstate
earlier this year, alleging itscompanies were violating Texas
laws in collecting driverlocation and driver behavior
data that it sold to othercompanies and used in setting
insurance rates.
So that's one area where we seetechnology changing rapidly and
(06:02):
we're seeing litigation takeoff and we're going to continue
to see it take off.
Tom Hagy (06:08):
Yeah, it's a wonderful and scary world.
In terms of the data collection, my gosh, the amazing things
you can do with mass dataanalysis and knowing you know.
And in terms of drivers, youknow who's driving recklessly,
who's speeding, who's whatever.
I mean, this is all.
I can see why it's valuable,but you can see where you know
it could be misused.
Talk a bit more about howtechnology, which is meant to
(06:30):
make insurers more efficient,how's it actually creating new
legal risks?
Jeremy Moseley (06:34):
Well, as consumers, we love when
technology works for us.
It saves us time, which in turnsaves us money.
Everything that is done thesame creates efficiency for a
company, which is great, and wesee advertisements, for example,
for being able to take picturesof your car after an accident
and get a check mailed to youfor the damages.
It's amazing.
(06:54):
It saves time.
It's efficient.
You can imagine a computeranalyzing the photos,
determining the damaged piecesand creating an estimate, and
you can do it, as a consumer,all from your phone in a matter
of minutes.
But the more automated theprocess is, the easier it is to
say that all the claims arehandled the same in a class
action, and so we just take asecond.
(07:16):
If we take a second, we canwalk through the process of how
it starts off as a greattechnology and ends up in a
place for a class action.
That creates a risk.
The faster a claim can behandled, the more claims a
single person can handle.
The more claims assigned to asingle person, the larger their
workload.
The larger their workload, theeasier it is to miss something
(07:40):
and the less time they have toaddress a problem if something
goes wrong.
You start off with somethingthat's excellent and is useful
and is a good thing to have, andyou can end up in a situation
where, if the majority of it isall done by a computer and the
person doesn't have enoughinvolvement, you're creating
some legal risks along the way.
That's one example in usingauto.
(08:03):
You can also see this on.
Take, for example, healthinsurance.
There's a lot of class actionsout there against the health
insurance industry for using AIto review medical bills and
review diagnosis codes, and onegood piece of that can be AI can
review medical bills andidentify diagnosis codes to see
(08:24):
whether those diagnoses areactually related to a particular
treatment or whether they'rethings that are wholly unrelated
and can kind of help bring into a reasonable realm treatment.
That should be considered inthe first place, but I think
Cigna has some class actionsagainst it.
Tom Hagy (08:43):
There's a good segue into our first batch of
questions around technologyautomation and class action.
So we're seeing lawsuits overmissed damages and uniform claim
handling, as you've mentioned.
What are plaintiffs reallytargeting in these cases?
How can insurers balanceefficiency with individualized
claim review to avoid litigation, and what checks, balances or
(09:03):
training steps should companiesbuild into automated systems to
reduce exposure?
So start off with the first onewhat are plaintiffs really
targeting in these cases?
Jeremy Moseley (09:12):
Well, I think one thing I'd start with is, as
Ecclesiastes says, there'snothing new under the sun.
What the insurers look at asefficiency, plaintiff lawyers
look at as a way to reduce claimpayments.
That's always going to be theirtheme.
You're just looking to pay less.
What insurers look at as timesaving, even for the customer,
the plaintiff lawyer looks at asa way to just increase profits
(09:35):
for the company.
So they're always looking athow claims are handled the same
way in class actions to showuniform methods and uniform
damages.
Tom Hagy (09:45):
So then how can insurers balance efficiency with
individualized claim review andavoid litigation?
Jeremy Moseley (09:51):
The key is always the human decision making
.
Who has the ultimate say Inclaims handling?
It's the human component.
Is it just overseeing theprocess that's being done almost
primarily by a computer, or arethey actually making the
decision?
How much involvement do theyhave to individualize the
process even slightly so thatyou can demonstrate something
(10:13):
more individualized to avoid aclass action or to demonstrate
early on in the class actionthat class action treatment is
not proper?
Tom Hagy (10:23):
When you're talking to your clients on the insurance
side, what checks, balances ortraining steps do you recommend
they build into automatedsystems to reduce exposure?
Jeremy Moseley (10:31):
You know, the first thing I'd say is most
companies know to do this and tohave these checks and balances
in place, and sometimes it'smore a matter of how well is it
documented in the file oractually put into practice.
So, no matter what theautomation is that is used,
first and foremost it isemphasizing its role in the
claims process with the adjuster.
(10:52):
So normally, where this comesup in the first place is there's
a challenge to the automatedprocess.
You know I'm obviously on thelitigation side.
You're dealing with someone whowas upset with something that
went wrong.
So what was that challenge?
And did they provide some basisfor why they're saying it
should have been handleddifferently than just what an
(11:14):
automated result would have beengiven with a human review?
And so the emphasis needs to bethat, whatever that automated
process is, it's a tool toassist an adjuster in making a
final decision, and it's onething to say it and to say that
the adjuster has that finaldecision, but it's another to
really empower the adjuster withthe ownership of a file.
(11:34):
Does the adjuster ever actuallydeviate from that tool?
And the balance that needs tobe created is the balance
between the consistency thatinsurers want across the board
and how they handle claims withthe autonomy that they want to
give the adjuster in makingdecisions.
A very common phrase in theinsurance industry is that each
(11:58):
claim is adjusted on its ownmerits.
Well, putting that intopractice means being able then
to let that adjuster have thatautonomy where they can actually
, when documented in the claimfile document what decision they
made to deviate from the tool,if you will and that can be
(12:19):
documenting why they followedthe tool and documenting why
they did not follow the tool,but that documentation then
allows us to demonstrate in thelitigation why class action
treatment is not appropriate.
Another thing that can behelpful when we're talking about
an automated process is when itinvolves the consumer.
(12:42):
A lot of these processes arebehind the scenes, but when
we're dealing with an automatedprocess that involves the
consumer, a lot of theseprocesses are behind the scenes.
But when we're dealing with anautomated process that involves
the consumer like they're goingto take photos and upload it
through an app is to use consentlanguage and to actually, in
the app, have things thatthey're clicking on, that they
agree that this is how they'regoing to start their claim, or
(13:04):
the steps they're going to takein the claim.
So, just like going back to thebeginning, when we talked about
data privacy and datacollection lawsuits, one of the
big things that is going to beused to prevent those in the
future is going to be how goodis your consent language?
It's the same thing here howusing consent language up front
so that the insured is agreeingthat this is the process that
(13:27):
they're using and they'vedecided to do their claim or
start their claim this way, is agood way to put things in place
that they're recognizing.
They could have called theadjuster, they could have gone
to a body shop, but they'vedecided to go this way.
That's faster for them, fortheir own convenience, as a way
(13:47):
to.
It's not going to stop.
Nothing can stop someone fromsuing later, right, but it at
least starts a good process orrisk way of minimizing risk up
front if you had themacknowledge that they are
consenting to starting theprocess this way.
Tom Hagy (14:08):
Yeah, so we've got consumers posting or sending
their uploads of their damagedcar.
So have we already had AIdamage your car for you in your
claim and submitting your carsall bashed up like it was in
Grand Theft Auto or something.
Has that happened?
Jeremy Moseley (14:29):
We don't know Not to my knowledge but I think
what one of the things youstarted with was the missed
damage, and I think what you're.
We're going to unpack that forjust a moment.
What's underlying that is thatyou've got a situation of the
photos are uploaded.
The first level of review isgoing to be some level of damage
that can be seen from thosephotos.
Somebody gets their check andgoes on about their life and
(14:51):
let's say it's not that major ofdamage so they don't bother to
actually take it in and get itrepaired.
But the reality is, if they hadgone to a shop, maybe some human
reviewing that would havenoticed more damage and they
would have written a moredetailed estimate and it would
have paid out more money.
And so the theory of liabilityis you have this process in
(15:13):
place because people will gothis faster route and then you
will write a check.
That is a smaller check andwhat was intended to be and is a
great time-saving method forthe consumer because they can
take these pictures, get astarting estimate and get paid
immediately the plaintiff'slawyer turns into no, you're
doing this to save money,because you don't want to
(15:35):
actually write larger checks.
That's the theory of liabilityin the lawsuit, but the reality
is most people just want tosubmit their basic damage and
only if they feel like gettingit repaired do they want to take
the time to go into a shop andactually get the more detailed
estimate and fully get paid thecost of a full repair when
they're actually getting itrepaired.
Tom Hagy (15:57):
I'm just imagining there'll be a time when there
are just sensors all over a car,you can say this busted the
fuel pipe, or whatever, thisbusted the muffler.
You know, I mean, it's alreadyjudging, it's already measuring
other things.
Jeremy Moseley (16:10):
That's probably true At some point.
You know they'll be able tojust get an upload from the car
sensors for a couple of thedamage as well.
Tom Hagy (16:19):
Yeah, yeah, that could be handy in a lot of ways.
Jeremy Moseley (16:22):
By then, the cost of our cars will be also
significant as well.
Tom Hagy (16:27):
Right, yeah, that's true, and I also want to give
you credit.
This is the first mention ofEcclesiastes on the podcast.
I think we had Deuteronomy once.
I think I brought that up.
Next, the customization ofinsurance policies.
And here we're.
You know, we've heard of theseclaims lawsuits claiming I
didn't know I needed it and youdidn't tell me well enough.
(16:49):
How is the push for morecustomized insurance products
driving litigation risk?
You've touched on it a bit needto choose to close to protect
themselves, and how can carriersdesign policies that meet
customer needs without creatingliability for what's left out?
So take the first one how isthe push for more customized
(17:12):
insurance products drivinglitigation risk?
Jeremy Moseley (17:15):
Well, customers are always looking for choices
and technology allows carriersto customize policies like never
before.
The reality is, insurance issomething you pay for and hope
you never actually need.
So for auto coverage, moststates mandate fairly low limits
, usually focused on liabilitycoverage, and for homeowners
coverage, the mortgage companyonly cares about whether the
(17:37):
mortgage amount is covered.
These are relatively minimalstandards.
For example, no state, andreally no one, mandates life
insurance, even though it's avery good thing to have.
So litigation risk I seeoccurring in two ways.
First, as you said, you haveinsurance claiming after the
fact that they would havepurchased that coverage if the
(17:58):
carrier offered it more clearlyor explained it better.
So the more customization youhave, the more potential for
gaps in coverage.
You have Gaps.
The customer chose up frontwhen what they really cared
about was a lower premium, butnow they wish they had that
coverage.
What they really cared aboutwas the lower premium, but now
they wish they had that coverage.
(18:18):
Second, the more customizationyou have on the front end, the
higher the chance you have ofnot identifying the correct
coverages on the claims floor.
When policy coverages areuniform, adjusters step into
every claim, at least knowingwhat coverages are available and
potential damages to evaluatefor a given state, and
previously there were relativelyfew coverages that might change
, like whether someone hascomprehensive and collision
coverage for auto, for example.
(18:39):
But the more coverages thatmight change like whether you've
got a long list of differentendorsements the more the
adjuster has to make sure theyhave those coverages and
benefits accurate when they'readjusting a claim.
Now, this is not an entirelynew phenomenon there, like I
(19:00):
said, have been some level ofcustomization before but it's
certainly an area I've seenlitigation in previously, for
years, and so with more, withthis push for more customization
, I expect to see an increase inlitigation in this area to
match it as well.
Tom Hagy (19:20):
Okay, so talk about then the communication or
disclosure gaps insurers need toclose to protect themselves.
Jeremy Moseley (19:27):
This is an area where I think technology can
really benefit the insurer,though it might take some data
storage to do it.
So some states do have specificdisclosure forms for certain
coverages you have to provide aninsured, so you already know
what you have to tell them forthose certain coverages, but
other states don't.
Now, if this is online, forexample, one option would be to
(19:51):
record what pages the insuredhas been shown and what your
disclosure boxes show what theyactually had to click on for the
disclosure to move on, whetherthey accepted the coverage or
not that they had to accept thisdisclosure.
Well, save that disclosure inthe application application.
(20:13):
If you're doing this on thephone, record the disclosures,
whether that means you played adisclosure that was a phone
recording to them, or whetherit's a disclosure that's read by
the agent or policy serviceswho's you know working with them
to determine what coveragesthey're going to determine in
their customization that theywant.
If it's through an agent youknow, include those disclosures
in an application.
(20:34):
I think most of this beingdriven by e-commerce means that
the reality is we're talkingabout this being done online
most of the time, and that givesthe insurers a lot of
flexibility to create someexcellent disclosure boxes,
acceptance screens and thingslike that, that they can have
adequate disclosures and thensave.
That is really the key ismaking sure that the technology
(20:56):
that they've used then allowsthem to save what the insured
saw and clicked on and agreed toon the back end so that they
have it for later when or ifthere's a challenge.
Now you can never reduce riskto zero, of course, but so you
still have the potential.
Someone will allege that thedisclosure they read wasn't good
(21:18):
enough.
That won't go away, but havingthat backstop of here's the
disclosures that were providedand that they clicked on is a
big difference If you're goingto allow that customization to
be able to show they did haveall these options.
And here's everything that theyselected and chose not to
(21:38):
accept at the time.
Tom Hagy (21:40):
Lastly, how can carriers design policies to meet
customer needs without creatingliability for what's left out?
Jeremy Moseley (21:46):
There are a lot of good policies out there with
good options.
What I would say is documentingyour disclosure really is the
key, even when it's not requiredby state law.
That is the best way tomitigate litigation risk.
I handle litigation frequentlywhere we are addressing the fact
that a particular disclosurewas not required by state law
(22:07):
and it is one of the elementsand a factor against the
plaintiff's claims, but it isnot always dispositive,
particularly early in thelitigation, depending on state
law.
So the difference betweenwinning on summary judgment at
the end of discovery and tryingto avoid being sued in the first
place is that kind ofdisclosure that, just because
(22:29):
you're not required to have itunder state law, it can be a
good practice to have in place.
Tom Hagy (22:35):
So let's move on to social inflation and nuclear
verdicts, or thermonuclearverdicts as you call them.
So this is social inflation isshifting how juries think about
damages.
So why aren't nuclear verdictsless surprising today than they
used to be, or why are they moreprevalent?
What can insurers and defenseteams do to counteract juror
(22:57):
bias and changing culturalexpectations around compensation
, and are there proactive stepsbeyond litigation that insurers
can take to address this trend?
So let's take the first oneFirst.
If you could just describe whatis meant by social inflation
and why are nuclear verdictsmore prevalent?
Jeremy Moseley (23:16):
Social inflation refers to the fact that
everything costs more, and thisidea that numbers are just
larger and that when we go tolook at verdicts these days and
we look at the cost associatedwith litigation and what
injuries are awarding, thenumbers are just larger than
(23:38):
they've been in the last fewyears.
That's a trend that we seeperiod and the reality is that
is a trend that's been here fora few years and, in my opinion,
it's not going away.
Here's what I would start with.
I would start with how we talkabout money in the media.
When we talk about money now,we talk about billionaires.
(24:01):
When we talk about rich people,we don't talk about
millionaires.
When we talk about our nationaldebt, we talk about it in the
trillions and in fact, even whenwe've been talking about our
deficit just our nationaldeficit, our annual budget
deficit year over year that isin the trillions.
(24:22):
And recently we've been talkingabout if you listen to in the
news the largest companies andwhat their market cap is.
Even that is now in thetrillions, and it was just a few
years ago when the firstcompany to break into the
trillions for a market cap wasmaking news.
So in just the last few years,we've really changed the way we
(24:44):
talk in the news about money andso, therefore, what people are
hearing, what jurors are hearingabout, how we talk about money,
has changed significantly.
If we want to talk five yearsago pre-COVID and post-COVID our
concept in terms of just anational discussion of money is
(25:05):
different, and I'll give you anexample of what I believe here
is going to be just agenerational shift in what we
see for verdicts and money goingforward.
In that context, when I firststarted practicing law, I was
talking to a senior partnerabout a case and we were talking
(25:25):
about discovery and what wascoming up and some issues.
And he said to me you know,that is the $64,000 question.
And I looked at him.
I had no idea what he wastalking about.
He had to explain to me thatthere was a game show from
before I was paying attention toTV, although was a game show
(25:49):
where that was the big questionand you got $64,000 for getting
it right.
So, to give you an idea, I wentand looked this up.
The game show who Wants to Be aMillionaire debuted in 1999, 26
years ago and at the time theidea of winning a million
dollars was a pretty big deal.
(26:10):
Well, today that would not besuch a big deal to a lot of
people to only get a milliondollars, if you will.
That's kind of where we are nowI think, oh, I don't know.
I mean, I would be very happyif you want to give me a million
dollars.
Tom Hagy (26:28):
I wouldn't get out of bed for less than a billion.
No, I got you.
Yeah, it's definitely different.
Jeremy Moseley (26:34):
And here's the other thing with inflation since
COVID, we talk now about howinflation has calmed down.
We're, you know, finally incontrol of inflation, but we do
so in terms of inflation yearover year, and so what that
means is we still have higherprices.
They're just not continuing togo up as much.
(26:54):
And even if we were to returnto some lower prices on things,
we're talking about a new normal, and that has desensitized
people to higher costs and to adiscussion of money, and the
bottom line is this $20 millionof someone else's money doesn't
(27:19):
seem like that much.
Tom Hagy (27:20):
Now, when you look at, I couldn't help but think about
CEO pay and professionalathlete pay.
You know, when you hear some ofthese contracts that they get
and a CEO will I don't know,maybe the company went bankrupt
or had all kinds of problems andthe CEO drops out, but they
still get like $50 million orsomething.
Yeah, you get used to hearingthat.
(27:41):
In terms of you know, guidance,what could insurers and defense
teams do to counteract jurorbias and changing cultural
expectations around compensation?
Jeremy Moseley (27:53):
juror bias and changing cultural expectations
around compensation.
You know lawyers talk a lotabout anchoring in a trial and
plaintiff lawyers refer toanchoring and they'll talk about
, you know, large numbers toanchor to things like priceless
art, public works projects orfighter jets and items that are
in the billions of dollars, andthey'll ask for damages in the
hundreds of millions, if notbillions, of dollars.
(28:15):
To anchor to something you knowvery significant and that's one
of the reasons that we seethese thermonuclear verdicts is
anchoring to numbers that are sosignificant, and there are
several studies out there abouthow defense lawyers need to be
doing the same thing in reverse.
They call it reverse anchoringor providing a defensive anchor,
and I agree, but I call it areality check.
(28:38):
Often the plaintiff lawyers aretalking about these
ridiculously high numbers andthey're not tied to anything to
do with the case, and what thedefense needs to do is provide a
reality check and tie it to theactual case, tie it to things
that matter and that the jurycan relate to in relationship to
(29:01):
whatever is going on in theactual case.
Take, for example, a plaintiffasking for $20 million in bad
faith damages if you're talkingabout a bad faith insurance case
against an insurer in Texas,for example, in Dallas, texas.
The average annual wage inDallas I looked it up is $66,500
(29:23):
.
Well, what they're asking for,if we're talking about
non-economic bad faith damagesof $20 million, is the
equivalent of 300 years of theaverage annual earnings.
That's the kind of conceptsthat need to be tied to reality
(29:43):
to get a jury to understand.
When we talk about $20 millionof someone else's money, let's
tie this down to reality.
What was this plaintiffactually making as an average
worker?
If that's what they were making, 300 years of wages.
If we're talking about aninsurance case, what was the
policy coverage?
(30:04):
Was it a property policy or anauto policy?
What was the policy limit?
You know, how many times thepolicy limit are they now asking
for.
Is it 20 times, 50 times thepolicy limit that they're now
asking for?
Tie it to things that areactually relevant to this case
to demonstrate how high andridiculous the number they're
(30:24):
now asking for is.
Another example is you know fora punitive damage award?
I saw last year In that contextfor punitive damages we're
talking about.
We're past the compensatorydamages, right, so you've
already awarded a lot of damagesor, if you will, all the
(30:45):
damages they think the plaintiffis entitled to for compensation
.
In Nevada State Court lastsummer actually just last year
in August a jury entered apunitive damage award against
Progressive for $100 million.
That did get reduced by thejudge after trial but in terms
of in front of the jury, whatwas being asked for and what
they awarded was $100 million.
(31:05):
Well, if you take the averagepremium, auto insurance is
expensive in Nevada.
Premium auto insurance isexpensive in Nevada.
So if you take the averagepremium of, say, $2,400 for a
year, that would take over41,000 insureds to pay that
(31:26):
award.
That's the kind of tying it toreality when you're saying
punish this company, they'reasking for the premiums of
41,000 insureds to be paid tothat plaintiff.
Tom Hagy (31:34):
Competitive damages obviously has a different
purpose.
It's supposed to have adeterrent effect.
Jeremy Moseley (31:39):
Yeah, it is, and that's why I think you can
directly get into things likethe premiums that are being
asked for and the impact it willhave on other insurers as well?
Tom Hagy (31:54):
And so what about the proactive steps, beyond
litigation, that insurers cantake to address the trend of
these nuclear verdicts?
Jeremy Moseley (32:01):
I would say there are three things that
insurers can look at clearverdicts.
I would say there are threethings that insurers can look at
.
The first and foremost is tortreform in the legislatures.
Obviously, these outlandishverdicts don't help consumers.
They raise the premiums foreveryone and the way to get
control of those is tort reform.
That is kind of the main way torein that in.
(32:23):
The second, I would say, isrisk management, both internally
and with corporate insurers fortheir liability claims, having
a greater focus on whateversafety programs.
That's obviously an area thatinsurers focus on with their
corporations, their corporateinsurers anyway.
But first and foremost that'swhat it often comes back to for
(32:45):
these large verdicts is what wasthe safety program in place and
why it wasn't sufficient.
And that has to be and can be aplace to not only focus on but
make sure that the corporateinsurers understand that they
are going to need to focus onthat as a high priority to avoid
these verdicts being enteredagainst them as well.
That was second and third.
(33:09):
I think it's an issue of socialchange.
The reality is society tends tobe on a pendulum and we really
have swung to the side thatlarge corporations in general
are evil and need to be punished.
That's just where we are rightnow.
It seems all companies,including insurers, can be
working to change that and itdoesn't happen overnight.
(33:31):
But as we kind of started offtalking about with this section
about social inflation, thediscussion about the
billion-dollar companies, thebillion-dollar CEOs, that
mindset that underlies thethermonuclear verdicts.
It ties into this A lot of largecompanies.
What are companies doing toshow that they're a part of the
(33:54):
company and that they're goodneighbors?
I think one of the things thathappened as well is a lot of
large companies waded into whatyou might call the culture war
in the last few years, whichended up being very polarizing,
and I think that had a negativeimpact on a lot of companies.
(34:16):
And it's very tricky becauseconsumers expect them to show
their good neighbors and nowthey have to figure out how to
get out of being involved insocial issues that are
polarizing.
So I don't have the answer tothat.
Tom Hagy (34:34):
I think we're all dancing through torches.
It's a super tricky time.
Jeremy Moseley (34:42):
I think that's the issue is being able to show
that they are part of acommunity, that they are good
neighbors, and yet doing so in away that reaches everyone and
isn't in the middle of acontroversy.
So it is not an easy thing todo by any means, but that's the
way to try to show that they aresocially part of a good
community.
Tom Hagy (35:03):
Yeah, yeah, yeah, I mean throwing in my own as a
policyholder.
I think one of the best thingswell, this would be for, like,
consumer level but one of thebest things are the agents.
I've had the same agent foralmost 40 years, steve DiIorio.
He still sends me ice cream onmy birthday, I mean.
(35:23):
And when we have conversationshe takes time, asks on my
birthday, I mean, and when wehave conversations he takes time
, asks about my kid.
I mean it's just, we're notfriends.
I mean we don't go out and youknow have, well, we're both half
Italian.
I was going to say we don't goout and have calzones, but well,
he's all Italian.
Pardon me, nevermind, I digress, but but anyway, it's's like
when I think about thatinsurance company, I don't think
(35:45):
about a corporation, I thinkabout him, you know.
I mean I had an accident.
It's funny.
My office was in his building.
I had an accident right infront of his office with another
one of his policyholders and weboth.
It was resolved before the endof the day.
You know what I mean.
It was just like, okay, thishappens.
But you know, and that's thingsyou know.
(36:05):
I covered insurance for manyyears and you know when
insurance companies canadequately forecast and have
adequate reserves for the risks.
That's one thing.
Things go very smoothly.
But, as you know, like in masstorts, I covered for years
environmental coverage,litigation and insurance
companies did not see thatcoming.
(36:27):
Nobody saw it coming.
A super fund came in andsuddenly, oh my gosh, right, and
that fight is still going on.
And I don't know how manystories I wrote about the
pollution exclusion, but it waseasily hundreds.
But anyway, back to my point isthat's one thing they have in
their arsenal are their agents.
(36:48):
But you also mentioned you usedthe word evil and it made me
think of two things.
One I believe for years I don'tknow if it's still the case,
but in Arizona, I believe, thestandard for proving bad faith
on the part of an insurer, youhad to prove that they had evil
intent.
Now I don't know if that'sstill true or not, but that was
(37:09):
in the 90s, I think, when I waswriting about it.
So I'm going to look it up andsee if evil is still the
standard.
The other thing I thought aboutwas Dr Evil.
When you talk about you knowhe's holding the planet hostage
for a million dollars.
Everybody looked at him.
It's like no, no, a billion.
It's keep going up.
(37:29):
There's some inflation rightthere.
Jeremy Moseley (37:31):
You're right and I guess you know.
If that were to be made today,he would have to say $1 trillion
, he would Yep.
Tom Hagy (37:37):
You're right.
You know you're right Because Ithink he just upped it to
billions.
So yeah, I don't know what'safter trillion.
Should I know Quadrillion?
Is that right?
Okay, I'll take that.
Climate change and riskmodeling I mean you talked about
diving into social issues.
(37:57):
It's funny how climate changeis almost a social issue too.
It's debatable.
Almost a social issue too, it'slike it's debatable.
But climate change is thethings I want to address is, you
know, it's reshapingunderwriting models.
How are catastrophic eventschanging the loss profile for
insurers?
Why don't you go ahead and takethat one first?
Jeremy Moseley (38:17):
What we're seeing, first of all, are a lot
of storms and catastrophicevents that are 50-year events
or 100-year events, but they'rehappening more often than that.
So the increase in frequency ischanging the risk.
And second, we're seeing ashift in location.
For example, I grew up inKansas in Tornado Alley, and
part of what that means is Iknew what was coming and we
(38:41):
heard the sirens.
So first of all, we had sirensthat went off regularly to test
at noon on Wednesday duringtornado season.
We knew how to prepare and weknew what to expect.
The other thing is it's Kansas,so there's not a lot of people.
So tornadoes can tear through alot of places and you know,
didn't do a lot of damage, otherthan I do recognize that they
(39:03):
could damage crops and thatcould be taken care of through
crop insurance and underwrittenfor it as well.
But now we see a shift and wesee those storms hitting
different areas and strikingfarther east, including
tornadoes that are strikingfarther east, including Middle
Tennessee.
In fact, I was just reading ameteorologist in Nashville
(39:25):
posted last month tornado alleyis shifting.
We have already seen 27tornadoes in middle Tennessee
this year.
Wow, that's the kind of changethat we're seeing where storms
have moved because of climatechange, and so these
catastrophic events or stormsthat may have been normal, if
(39:45):
you will, for certain areas ofthe country are moving and now
they're hitting a differentlocation.
Tom Hagy (39:50):
Yeah, Growing up in Ohio, even though that's not
quite Kansas, but we still hadtornadoes, especially in the
middle part of the state.
It was very flat and, yeah, thesirens.
You know, you knew ahead oftime and you knew where to go.
Get out of the way, get undersomething sturdy.
The good news about tornadoesat least they tend to be over
quickly so you can get into asafe room.
(40:13):
But you won't be there for aweek.
You just have to be there for aweek.
But man, the devastation isjust.
You can't believe it until yousee it happen, it's true.
Jeremy Moseley (40:22):
And another thing with intensity, as the
intensity grows, that changesthe devastation they can cause.
Because my understanding istypically a tornado, when it
hits a heat center, it spins off, and that's why they often
don't go through cities, is itwould hit that heat and it would
go around the city because ofthe heat generated by a city.
(40:43):
But when they're a lot moreintense, they don't get spun off
by the heat of the city and sothen they'll go through a city.
So when you have a muchstronger storm and a much
stronger tornado that's whythose are have one that can
actually go into a city and gothrough a city and cause more
devastation as well.
Tom Hagy (41:12):
So what happened?
You mentioned Kansas not beingdensely populated, which must be
nice I'd like to visit once ina while.
I'd like to go from New York toKansas and back, just so I can
have a little bit of both.
But what happens whenpopulation growth and unprepared
infrastructure collide withclimate-related risks?
(41:34):
Because we're seeing not onlystorms, but you're also seeing
that infrastructure isn'tnecessarily built for extreme
temperatures and other events.
So what happens?
Jeremy Moseley (41:49):
I think, overall , what we have is an unprepared
risk model.
You have insurers who've beenunderwriting for, like I said,
tornadoes in Kansas for decades.
But what about Tennessee?
You have a population that isnot necessarily as prepared and,
as you mentioned, a differentinfrastructure as well, and you
have an infrastructure that isprepared for one set of events
(42:12):
and is not prepared for one, thehigh heat and things that we're
seeing and two, the storms orevents that have shifted to a
different area.
So, as climate change not onlybrings these more severe storms,
the shift in where the stormsare located creates a different
underwriting.
So, as climate change not onlybrings these more severe storms,
the shift in where the stormsare located creates a different
underwriting risk for the future, because the damages are
occurring in a location and to apopulation that, historically,
(42:34):
is not necessarily as preparedfor that risk in the first place
.
Tom Hagy (42:38):
Well, how are premium bases and risk development
strategies evolving, and whatdoes that mean for litigation?
Jeremy Moseley (42:44):
First of all, talking about premiums, this is
what actuaries do and I imaginethe question is can they do it
fast enough and accuratelyenough when the weather in many
ways appears to be sounpredictable?
But one challenge as well isthat state regulators control
premium increases, and premiumchanges, therefore, are very
(43:04):
reactionary.
So while insurers may predictthese risks and these shifts,
until losses actually increasein an area, I expect they'll
have significant resistance toincreasing premiums for the new
risk pool until existing lossessupport that change.
So for the second thing youasked about related to
litigation, some states havespecific laws that address these
(43:27):
kinds of risks and some statesdon't.
So as the risks shift, Ianticipate we'll see the
litigation shift to new states,and I'll give you an example.
Litigation, of course, oftenfollows catastrophic events, but
in Colorado, after the 2012wildfires, we saw a number of
law firms from Texas and Floridamove into Colorado and open
(43:52):
offices here, and it wasn't justthat you have more lawyers here
to help those who had homesdamaged.
We saw an increase in both theclaims practices and litigation
practices for how claims hadbeen handled and litigated in
Florida and Texas, which wasvery different from how claims
(44:13):
were handled and litigated inColorado prior to that.
So those are some of the thingsI think you'll see.
Shift and change as well isthat, as a pattern of storms and
shift, you will see thosechanges in litigation follow,
where it will also be the claimspractices that will follow from
(44:38):
state to state, which will thenincrease litigation as well.
Tom Hagy (44:41):
If you could leave insurers or other listeners here
with a one key warning, or twoor a call to action, what would
it be?
Jeremy Moseley (44:48):
The first thing I'd say I think is really a
warning, or, if you will, that,as I said earlier, I believe we
are at the front end of agenerational shift in litigation
that we may be labeling in partas social inflation, but it is
really here to stay.
So there was a period afterCOVID where verdicts went high
(45:12):
and there was a thought thatthis is just some pent-up anger
and aggression related to beingin our house for too long, and
verdicts did go back down alittle bit after that, but
overall for damages.
(45:32):
I think we're seeing a lot ofverdicts that are going to stay
high across the board and thatthere needs to be a recognition
that, because of inflationoverall and because, as I said,
the way we talk about money haschanged so much that verdicts,
generally speaking, are going tobe essentially a different
level across the board than theywere pre-COVID, and that this
(45:52):
is, as I said, a generationalshift in how we look at money
and what we can expect to see inverdicts going forward.
Tom Hagy (45:59):
So what do you think is going to be next?
What's the next major wave ofinsurance litigation?
Do you see?
Jeremy Moseley (46:03):
I think it's already there in other areas and
I think it's coming to insurersnext, and I really do think
it's going to be data-driven.
I think it's going to becollection and the use of data.
So, while it's mostly againstother companies right now, I
expect class action lawyers willkeep working on ways to come
after insurance companies nextwith how insurance companies use
(46:25):
all the data they have, becausethe reality is, insurance
companies have a whole lot ofdata, and so it's a matter of
the class action lawyers lookingfor how can they turn that into
a good class action.
Tom Hagy (46:40):
The only question I have is now.
You've mentioned COVID as beingthe pandemic being over.
I've been in my apartment sinceMarch of 2020.
I'm not up on the news.
I don't know if anything'shappened since then.
Jeremy Moseley (46:51):
I'm just saying that I think you're allowed to
come out now if you'd like to.
You want to is another story.
Tom Hagy (46:57):
Is that legal advice?
Okay, yeah, that's true, that'strue.
But Colorado is a beautifulplace to come visit.
I love Colorado, so I'll haveto stop there again someday,
maybe find Jefferson, maybe ridemy horse.
Well, jeremy Mosley, thank youvery much for talking with me
about this today.
I appreciate it.
Thank you, tom, I appreciatethe opportunity.
Yeah, my horse, jefferson.
(47:21):
That was a reference.
I had been talking to Jeremybefore we started recording
about the best family vacation Iever had.
Our girls were 8 and 10.
They're now in their 30s, butit was a dude ranch in Lyons,
colorado.
It was a great time Fly fishing.
They assigned you a horse.
My horse's name was Jeffersonand he was quite in charge, but
(47:42):
that's why I mentioned that, andso I want to thank Jeremy
Mosley for speaking with metoday.
He is partner at Spencer Fanein Denver, colorado.
I appreciate him sharing hisinsights.
Hey, if you want to reach me,want to work together or just
complain, my contact informationis in the show notes.
Also, if you have a minute,give us a rating.
Thanks for listening.
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