WHY INSURANCE ARCHAEOLOGY?
Insurance archaeology exists because liabilities often emerge decades after a triggering event and can cost corporations hundreds of millions of dollars. Old "occurrence-based" insurance policies live as long as the liabilities that were triggered during the policy period and can provide policyholders with coverage for litigation today. In fact, older policies can be more valuable as they have fewer exclusions and sometimes contain no aggregate limits.
Decades of rapid acceleration in the pace of merger and acquisition activity on the one hand, and litigation on the other, have led to the broad recognition that an organization's historic insurance assets were easy to lose track of-and very valuable. In particular, organizations with significant exposure to long tail liabilities including asbestos, environmental, or product liability claims have been likely to need insurance archaeology, a term that has come to denote not only recovery efforts for specific lost policies but also broad-based projects to reconstruct and organize their historic insurance portfolio.
Many organizations have found that managing insurance assets requires constant updating and maintenance. Heightened activity on three fronts-changes in corporate identity, erosion of insurance assets via insolvencies and run-offs, and a fresh surge of environmental activism coinciding with the first rumblings of global warming litigation-have made the task of maintaining the historic insurance portfolio more essential and more challenging than ever.
The policyholder that has quick access to its entire insurance portfolio is prepared for the predictably unpredictable challenges of the twenty-first century. Whether the challenge is notifying hundreds of insures over several decades of toxic tort litigation or environmental actions, dealing with competing claims for the same policy limits from former subsidiaries, or enhancing sale value in a merger or real estate transaction, the return on investment from continually updating a historic insurance audit will be dramatic. Millions of dollars of coverage will be preserved and at the ready.