3-20-12; Chartis, a division of The American International Group (AIG), will no longer write stand-alone excess workers' compensation coverage, said AIG, in a U.S. Securities and Exchange Commission..

We again thank another reader for this blast. For those of us involved in the management of workers' compensation, the three reasons for Chartis' decision are noteworthy:

Ø  Workers' compensation coverage has an extremely long “tail” and is challenging to reserve.

Ø  The reserving is sensitive to small changes in assumptions.

Ø  In response to health care reform, cost-shifting to workers' compensation may occur.

For lawyers in the defense trenches we are thrilled in the hope we will no longer have to deal with the “AIG approved list” where someone in a corporate tower in New York tried to analyze the Illinois defense community and determine who the best defense firms might be. We still remember convincing their management group one of the Illinois firms on their limiting list was a claimant firm—they removed the firm from their list but wouldn’t make any other changes to add another defense firm!

Your editor spent most of the decade of the 1990’s going out to AIG, now Chartis headquarters to discuss and market them. The only good thing that came from such trips was the New York Yankees usually won the World Series whenever we made the trip.

We are aware of another national excess insurance carrier that vetted hundreds of defense firms and built a similar national “approved counsel” list. Having done so, they later made the decision to randomly drop a number of firms without any new research or basis for the exclusionary process. We hate to see the major players in our defense industry act in such fashion and assure our readers it is one of the most painful aspects of defense practice.

Our request to all national insurers who want to manage such defense attorney lists—please do it carefully and with consideration for the lives they affect. We appreciate your thoughts and comments.