Is My Drywall Chinese? - HB Litigation Conferences

The LDI’s Advisory Letter warned that insurance companies should rely on exclusions to
disclaim coverage only for claims made by “intentional active industrial polluters.” 32 The
Louisiana Commissioner found that the insurance industry had been ignoring its regulatory
promises to apply the exclusion in a principled manner, in cases involving industrial pollution.
The Advisory Letter stressed that the Department would take future action if it was needed to
protect “the integrity of the regulatory process”:
The appropriate use of standard pollution exclusions in claims
handling is an issue of grave concern. The [Louisiana Department
of Insurance] will take such action as is necessary to assure that the
integrity of the regulatory process is not undermined. 33
Clarifications (but not Reductions) of Coverage
Contrary to arguments sometimes advanced by insurers, insurance companies do not
charge premiums for an endorsement called the “Amendment of Pollution Exclusion – Exception
for Building Heating Equipment.” This mandatory endorsement makes clear that liability for so-
called “puff-backs” from heating equipment remained covered by CGL policies notwithstanding
the APE. For example, the LDI complained to ISO when it learned that insurance companies
were using the APE to deny coverage for such incidents. Because the LDI had based its
32
State of Louisiana Advisory Letter No. 97-91 at 3-4 (June 4, 1997) (posted at
. See also
Advisory Letter No. 01-01 (warning about “excessive use” of total pollution exclusion).
33
Id. at 2 (emphasis added). See also C. Noel Wertz, The Role of Regulators in Environmental
Claims, 7 Coverage, No. 3, at 27 (Nov./Dec. 1997) (available on Lexis/Nexis) (explaining LDI=s
position regarding the polluter’s exclusions); John A. MacDonald, The Assault on the Insurance
Regulatory and Judicial Systems: Three Decades of Broken Insurance Industry Promises and
Regulatory and Litigation Deceit in Pollution Cases, 7 Coverage, No. 6, at 3 (Nov./Dec. 1997)
(available on Lexis/Nexis).
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