EXCESS,
SURPLUS LINES AND REINSURANCE
(ESLR)
Nothing But Net
By: Larry
P. Schiffer
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The Internet allows us to communicate through e-mail and electronic document transfer.
Outside counsel can keep in-house counsel up to date on a matter through periodic e-mail
status reports and can provide draft pleadings and motions in electronic format for easy
editing. In-house counsel can receive requests for legal advice and provide quick
electronic responses to internal clients through e-mail and corporate intranets. Carriers
can communicate electronically with brokers and intermediaries, as well as directly with
insureds to obtain the latest financial or loss information. Ceding companies can provide
electronic reports to reinsurers through e-mail, including both claim notices and
financial information about the reinsurance agreement.
The ease and usefulness of electronic communication of business information provides both
opportunities and risks. One risk that outside and in-house counsel must consider when
communicating electronically is whether that communication may be discoverable and whether
it is protected by the attorney-client privilege. Another risk to consider is whether a
cedent that provides information electronically a reinsurer waives any claim of
confidentiality of the communication.
There is not enough space in this article to begin to analyze these issues. Suffice it to
say that with the growing use of the Internet and e-mail for business communications,
members of this Committee will be called upon to evaluate and litigate issues concerning
the treatment of electronic information exchanged in the excess, surplus lines, and
reinsurance marketplace. Bar association committees are examining these issues on a
broader perspective throughout the country and the courts are just beginning to deal with
these issues. As practitioners in a specialized industry, it is incumbent upon us to be
aware of these issues as they affect our clients, and provide solutions to clients'
problems concerning electronic communications.
There is a song from the 1970s that includes the line: "paranoia will destroy
ya." Use of e-mail and other means of electronic information exchange should not be
abandoned because of unrealistic concerns about security. Electronic communications are
not significantly different from telephonic communications or facsimiles. If the proper
safeguards are taken to maintain a communication as privileged or confidential, the fact
that it is electronic should not make a difference. That is not to say, however, that
extremely sensitive materials should be transmitted without encryption or other more
enhanced security protocols. Members of this Committee will need to guide our clients in
making sure that our communications with our clients, and our clients' privileged or
confidential communications internally or with other business partners, remain privileged
and confidential.
This topic and any other topics concerning this Committee or the excess, surplus lines,
and reinsurance industries may be discussed on the ESLR Committee List Serve by sending an
e-mail message to eslrcom@abanet.org to start a discussion. If you are not subscribed to
eslrcom, send me an e-mail at lschiffe@llgm.com and we'll sign you up.
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