In an emerging mass tort situation, what is the role of the defendant company’s insurance broker? And how should the tort defendant company and its counsel interface with that insurance broker? It is logical that a defendant company would turn to its insurance broker, particularly if the two have a long-standing relationship, and if that company has limited experience with mass tort claims. But careful consideration should be given to the insurance broker’s potential role in pursuing coverage and how the company and/or its counsel should interface with the broker. One significant issue addressed in Mass Torts in the United States, for example, is how to maximize privilege protections of communications involving insurance brokers.
Another important privilege consideration for defense counsel and their client involves communications with the policyholder’s insurance broker. Although insurance brokers are an important resource, communication with insurance brokers is not without risk. Specifically, in an insurance coverage action, some courts have held that communications with brokers are discoverable. Because such privilege determinations are dependent on both facts and the applicable state law, policyholders and their counsel need to be careful in their communications, oral and written, with brokers. The key test courts have used is whether the broker is facilitating the rendition of legal services. Consequently, communications regarding pursuit of an insurance claim are likely more protected than ordinary business communications such as insurance renewals.
Counsel needs to determine the privilege rules applicable to their matter and should err on the side of caution in communications with brokers. Additionally, if an insurance broker will be involved in pursuit of coverage, a separate NDA should be entered into with the broker. The agreement should make clear that the broker is to maintain information in confidence and that the broker is facilitating the rendition of legal services. Such an agreement will bolster the policyholder’s privilege claim. A sample NDA with an insurance broker is provided in Appendix F.
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