USA Law and Practice Contributed by: Christina Culver, Rhonda Thompson and L. Michael Brooks, Thompson, Coe, Cousins & Irons, LLP
ESG-related disclosure risk remains dynamic: the Ninth Circuit stayed enforcement of California SB 261’s climate risk reporting requirement but did not stay SB 253’s Scope 1 and 2 greenhouse-gas-emis- sions disclosure requirement, indicating continued state-level activity despite a reduced federal ESG posture. Other states enacting pro-ESG measures include Colorado, Florida, Illinois, Maine, Maryland, New Hampshire, Oregon and Utah. Wildfire-related insurance coverage disputes are mul- tiplying, particularly in California, Colorado and other western states. Anti-concurrent causation (ACC) clauses, which deny coverage whenever an excluded peril combines with a covered peril to cause loss, are central in many of these disputes. Courts in several jurisdictions have enforced ACC clauses as clear and unambiguous contractual provisions, though some states have found ACC clauses unenforceable when inconsistent with mandatory state fire insurance stat- utes. The California wildfire crisis has also prompted state regulatory intervention, including restrictions on non-renewal and the expansion of the California FAIR Plan as an insurer of last resort, generating col- lateral coverage litigation over FAIR Plan scope and adequacy. There is a perception in the market that the deregula- tion measures on the federal level may ease ESG-relat- ed risk in the D&O arena, with a significant rollback in federal environmental regulation in relation to energy production and the displacement of diversity, equity, and inclusion (DEI) policies. However, increased envi- ronmental, cyber, and AI-related risks will continue to When insurers delegate underwriting or claims-han- dling functions to managing general agents or third- party administrators (TPAs), it may create multiple challenges in coverage disputes, including: • the scope and limits of actual authority conferred by the delegation; • the attribution of the agent or TPA’s conduct to the insurer under agency principles; create uncertainty in the D&O market. 4.8 Delegated Authority and Claims Responsibility
• bad-faith liability when delegated claims handling is deficient; and • estoppel and waiver arising from the agent’s con- duct. The majority rule is that insurers generally cannot escape liability for coverage or bad-faith claims by pointing to the intermediary’s conduct when that inter- mediary was acting as the insurer’s agent. However, the insurer’s liability will depend on whether the agent had actual, implied, or apparent authority, and on the specific statutory framework of the state. The insurer’s duty of good faith and fair dealing is generally deemed non-delegable, meaning the insur- er remains liable for bad-faith acts by third parties authorised to handle claims, even though these third parties cannot themselves be sued for bad faith in the absence of a contractual relationship. Courts apply agency principles where the third-party acts as the insurer’s agent within the scope of granted authority, thus imputing wrongful conduct to the insurer. An agent’s authority to bind or represent may arise by implication or apparent authority, and agent or broker liability hinges on whether duties are owed to the insured, insurer, or both, with the courts recog- nising potential dual agency, but generally confining bad-faith liability to the insurer. Claims against agents frequently fall under negligence or misrepresentation theories, given their typically non-contractual status in respect of insureds. An additional issue that arises is whether the agent or TPA may be subject to common-law or statutory bad-faith claims directly, resulting in the agent or TPA being added as a defendant in coverage and extra- contractual lawsuits. Indemnification clauses in the delegation agreement or the extension of errors-and- omissions coverage to the agent by the insurer may result in shifting of financial responsibility for the agent or TPA’s conduct back to the insurer based on these contractual rights and duties. Alternatively, indemnifi- cation may work the other way, with the insurer seek- ing recovery from the agent or TPA. Other delegation-related issues arise as insurers continue to deploy AI in underwriting, risk manage-
299 I NSURANCE L I T IGATI O N 2026
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