Home > Expertise
 


Expertise
Representative Expertise of
William D. Hager

Actuarial Malpractice

Issue: Most lawyers overlook liability embedded in the negligent provision of actuarial services, or overlook defenses to such allegations. Actuaries, like accountants and other professionals, have a professional obligation to their clients which in many cases is evidenced by professional liability coverage. Almost every insurance company insolvency raises at least the issue of actuarial malpractice. That cause of action and its potential recovery is among the many assets to be targeted for collection by the liquidator.

In addition, many financial transactions today contain professional actuarial work product. To the extent that that work has been negligently provided, a cause of action against the consulting actuary can arise.

Particular Expert Skills.

  • Intimate knowledge of the organization and structure of the actuarial profession, gained through 25 years of experience and direct supervision of a staff of 150 actuaries
  • Author of the leading authority on actuarial malpractice
  • Ability to optimize an actuarial malpractice case (for or against) through cross-examination assistance and expert testimony as to actuarial standards for work product and ethics
  • Former general counsel to the American Academy of Actuaries
  • Intricate knowledge of the interaction of actuarial science and insurance
Top of Page

Agent Liability Issues

Issue: Increasingly, insurance agents have come under focus for their actions or inactions. Examples include allegations of failure to recommend coverages or failure to add requested coverages.

Overall.  Mr. Hager has pervasive and extensive experience as to agent liability.  As Insurance Commissioner and First Deputy Insurance Commissioner, he oversaw regulation of all phases of agent responsibility and duties.  His professional experiences also include substantive and pervasive intersection with the insurance agent community and standards of practice that come bear on an agent.

Top of Page

Insurance Agency Valuations

Issue: Increasingly the value of a specific insurance agency can be pivotal in litigation, whether as a result of (i) divorce, (ii) a dispute between owners, (iii) a buy sell agreement that has gone wrong, (iv) estate based litigation or (v) other transactions. In such event, it is important to get the value of the insurance agency right so that a fair result is available to all of the parties.

Overall: As a lawyer with an undergraduate mathematics degree and significant direct regulatory and industry financial experience, Mr. Hager has in-depth knowledge and hands-on expertise in valuing insurance agencies. As First Deputy Insurance Commissioner and later as Insurance Commissioner, he had responsibility to assure that insurance company owned insurance agencies were correctly valued on the insurer's balance sheet. As required, this valuation was confirmed with a hands-on field review of the agency, its operations and its financials.

As to financial acumen, Mr. Hager has spent most of his career around the financial underpinnings of the insurance and agency industry. As a lawyer in private practice, Mr. Hager has served as counsel to both the statewide life agent's association (then, the Association of Life Underwriters) and the statewide property casualty agent's association (Professional Insurance Agents). As an Administrative Law Judge (the title at the time was Hearing Officer) while serving as a regulator, Mr. Hager has heard scores of cases relating to insurance agents and insurance agencies and their value. As CEO of a major insurance industry organization (NCCI), Mr. Hager had daily responsibility for liaison with the national professional insurance agents associations. As a result of this and the other work set out in this website, Mr. Hager has knowledge of the macro and micro elements of insurance agency valuations and the ability to credibly articulate them.

Top of Page

Antitrust

Overall, as to Insurer Federal Antitrust Actions. Mr. Hager served as General Counsel and Director of Government Relations to the American Academy of Actuaries. This organization brings pricing competitors together (for professional purposes). As a result, constant antitrust sensitivity to all Academy activities was required. Mr. Hager led this effort. Similarly as CEO of NCCI, Mr. Hager had ultimate responsibility to assure ongoing antitrust compliance for that organization. NCCI lawfully established proposed rates on behalf of insurer/competitors ($16 billion of proposed rates annually). As such, antitrust compliance was a major responsibility for Mr. Hager.

Top of Page

Policy Language / Applications / Coverage Issues for Liability Policies / Commercial General Liability Coverage / Auto Policies / Homeowner Policies / Disability / Health / Life / Annuities / Reinsurance

Issue. Particular policy language frequently is at the center of insurance-based litigation. Commercial General Liability policies lead the list of interpretation cases. CGL policies are followed closely by all forms of liability policies (whether free-standing such as professional liability policies or as coverage embedded in broader policies such as auto). Coverage issues also arise as to auto policies (including liability and uninsured and underinsured coverage), homeowners policies, disability policies, health policies, life policies, annuity (including variable annuities) policies and reinsurance contracts. In addition, issues arise in connection with the application form relating to these policies as completed by the agent or the insured. Mr. Hager has provided extensive testimony in cases with policy language interpretation issues, including their related applications.

Specific Expert Skills as to Language Interpretation

  • Tracking specific policy language to (a) case law (b) statutory provisions (c) drafting intent (d) insurance industry literature and (e) academic/textbook commentary.
  • As Insurance Commissioner, Mr. Hager annually oversaw the approval of some 50,000 insurance policy forms, including every word of every form. This approval process included word-by-word and sentence-by-sentence and paragraph-by-paragraph examination of the following types of policies (including their accompanying application forms): GCL, all forms of professional liability policies including errors and omission and director and officer policies, automobile policies, homeowners policies, disability policies, health and long term care polices, life insurance policies, annuities and certain reinsurance policies. Further, his department had responsibility to regulate insurer construction of policy language as to insureds.
  • As CEO of NCCI, Mr. Hager had responsibility to annually file numerous standard industry-wide workers compensation policy forms and provisions nationwide, including responsibility for every word of every such form.
  • As General Council and Director of Government Relations to the American Academy of Actuaries, Mr. Hager worked daily with the actuarial profession. Ultimately most coverage language is approved by company actuaries in that pricing must be made commensurate with the related coverage.

Top of Page

Bad Faith

Issue. Insurance bad faith allegations can arise today in both first party and third party claim settings. The allegations can arise in all forms of life, health, and property casualty policies and similarly can arise as to individual insureds and as to large commercial insureds. Allegations can arise as to (i) claim payments being wrongfully denied, (ii) unreasonably delayed claim payments, (iii) wrongfully underpaid claim payments, (iv) failure by the insurer to adequately investigate the claim, and (v) unreasonable interpretation and application of policy language by the insurer.

Expertise. Mr. Hager has wide ranging bad faith expertise as to life, health and property casualty matters. As a regulator in a major insurance state for eight years, Mr. Hager had statutory responsibility to regulate against bad faith for all lines of insurance and to identify and as appropriate, pre-empt or prosecute bad faith within the regulatory administrative action context.

On the industry side, as a CEO of a major insurance industry organization (NCCI), he had responsibility to assure that his organization adhered to all applicable provisions of bad faith. As an insurance lawyer in private practice, he guided insurance clients away from the pitfalls of bad faith. As an expert witness, he has testified in numerous bad faith cases. Because of his expertise and ability to articulate applicable standards of practice/ standards of care/ custom and practice, Mr. Hager is an effective bad faith expert witness.

Top of Page

Damages - Most areas including Punitives

Overall as to Damages. Given Mr. Hager's extensive and broad-based experience in most aspects of insurance transactions, he is highly capable of providing articulate damage testimony including reports and punitives.

Specific Expert Skills as to Calculating Damages (Including Punitive Damages)

  • Mr. Hager has previously provided expert testimony and reports on damages in insurance cases
  • Experience includes opinions on punitives
  • Bachelors degree in mathematics (B.A., Secondary Mathematics Education)
  • Former General Counsel, American Academy of Actuaries
  • Lawyer
  • Extensive exposure to insurer practices at the highest levels as to what is fair and unfair; reasonable and unreasonable;
  • Able to apply damage formulas to complex cases;
  • Conversant with the foundation for punitives and determining their applicability
  • Extensive exposure to insurance federal antitrust matters, including liability and damages in connection with insurer RICO/collusion matters
Top of Page

Demutualizations

Overall. As an attorney in private practice, Mr. Hager provided full representation (including case presentation at the demutualization hearing) for insureds challenging the fairness of a specific demutualization. As Insurance Commissioner, Mr. Hager administered Iowa's demutualization law and dealt with several demutualization issues before adoption of the Model Act.

Specific Expert Skills as to Demutualizations.

  • Full knowledge of relevant statutes
  • Optimization of demutualization case results (for or against) through strategic and tactical guidance
  • Cutting edge knowledge of successfully using the media component of demutualizations
  • Ability to provide expert testimony as to most phases of a demutualization proposal
Top of Page

Mold

Overall. Though mold has probably been around since the beginning of time, it received prominence in part following the Ballard case in Texas. Since that decision, mold has become one of the hot insurance topics for both insureds and insurers. Mold claims can arise from faulty construction, storm damage, fire, ice, frozen water pipes, leaking plumbing and burst water heaters to name just a few. Though mold is generally excluded today in most first party property coverage forms (both personal and commercial) there may be coverage (in a first party situation) if a covered cause of damage is connected to the mold. In third party circumstances, mold claims parallel other third party claims in that (i) coverage, (ii) damages and (iii) legal liability must all be assessed.

Expertise Mr. Hager has testified both in deposition and trial as to insurer’s duty of care in connection with mold claims. His expertise is grounded in (i) policy language (having approved and disapproved thousands of policy forms as a regulator), (ii) regulatory oversight over the claim handling processes of hundreds of property casualty insurance companies and thousands of claim files, all to assure compliance (or non-compliance) with applicable law, policy provisions and the Unfair Claims Practices Act, and (iii) industry experience as CEO of a large property casualty insurance organization.

Top of Page

Liquidations

Overall. As Insurance Commissioner, Mr. Hager oversaw six different insurance company liquidations and served on several committees of the NAIC dealing with liquidation matters. He has intimate knowledge of most aspects of the liquidation process.

Specific Expert Skills as to Liquidation Matters

  • Interpretation of reinsurance contracts and clauses in accordance with applicable NAIC guidelines.
  • Accounting matter evaluation (SAP vs. GAAP) working with seasoned regulatory CPAs.
  • Damage determination
Top of Page

Other Property Casualty / Life Health Matters

Rate Filings

  • Challenging or Supporting Proposed Rate Changes, partnering as needed with an FCAS or FSA.
  • Federal Antitrust matters/ RICO/Collusion by Insurers in Rate Matters
    Industry Practices and in general.

Overall. As the former CEO of NCCI, Mr. Hager is uniquely positioned to provide pivotal testimony in ratemaking cases in the additional areas of property casualty rates other than workers comp. As necessary, he teams up with casualty/life actuaries who themselves in the past created and advocated rate increases on behalf of the industry. Together, they present a formidable combination to either support or resist proposed rate increases. In addition, these skills can be applied to optimally position the case or its resistance in chief. While CEO of NCCI, Mr. Hager annually filed for rate changes affecting $16 billion of workers compensation premium.

This same background provides Mr. Hager with a strong platform to provide expert testimony on insurer collusion (on either side of this issue) as to rate activity.

Unique Skills/ Attributes

  • Leadership positions with NCCI, American Academy of Actuaries and the Iowa Insurance Department
  • Served as Hearing Officer on many Proposed Rate Increases
  • Full knowledge of the U.S. insurance regulatory community, including filing strategies and tactics
  • Can team with highly qualified actuaries
Top of Page

Reinsurance

Overall. As a regulator charged with liquidating several insolvent insurers, recovering reinsurance assets was perhaps the most important task of a successful wind-down. Every kind of reinsurance issue and defense arises under these circumstances. As an experienced regulator, Mr. Hager has managed many complicated reinsurance issues. In addition, his other professional experiences required intricate knowledge of most reinsurance mechanisms. Mr. Hager is a certified U.S. reinsurance and insurance arbitrator (www.arias-us.org). See also Mr. Hager's arbitration website at www.insurance-metrics.com.

Particular Expert Skills. Mr. Hager has provided successful expert testimony as to the appropriate interpretation of reinsurance contracts and provided related expert reports. One example of a liquidation case is Greene, et. al. v. AMS Life Insurance Company. In this particular matter, there were six reinsurance contracts of all forms in play. Mr. Hager's testimony demonstrated a full understanding of the complex reinsurance interrelationships. The liquidator achieved an $18 million verdict in this case.

Download Decision

Top of Page

Statutory and Regulatory Construction

Issue. In the course of insurance litigation, the interpretation of specific insurance statutory and regulatory provisions invariably comes into play and a clear understanding of the law is a condition precedent to effective expert witness testimony. A few examples (and there are thousands of others) include:

  1. Whether a particular insurer’s policy complies with the statutory and regulatory requirements for such policies;
  2. How to interpret and apply in a specific case, the rate filing materials of a specific insurer;
  3. Whether a state DOI’s regulations as promulgated fall within their related statutory authority;
  4. The relationship of a state’s Unfair Claims Practices Act to standards of care as applicable to a particular insurer and a particular set of facts;
  5. Whether a violation of a state’s Unfair Claims Practices Act creates a cause of action in the first party or third party insured;
  6. Whether a life insurer’s application form complies with regulatory requirements;
  7. Whether an insured materially misrepresented information on a life, annuity or property casualty application form, given the subject state’s definition of materially misrepresented; and
  8. Whether a variable annuity complies with both state and federal (securities) law.

Expertise. As Commissioner of Insurance, Mr. Hager has applied state statutory and regulatory provisions in approving and disapproving tens of thousands of all types of life health and property casualty applications and forms. As a regulator for eight years, he also applied the law and related regulations (including Model NAIC Acts) to a wide range of transactions including mergers, reinsurance arrangements, insurer reserving and accounting practices, annual statement filings, agents and agent licensing activities, compliance and non-compliance with the Unfair Claims Practices Act and the Unfair Trade Practices Act and market conduct actions.

As an insurance lawyer, Mr. Hager has written four insurance law review articles and understands the interplay between statutes, regulations, case law, NAIC model acts, NASD and SEC requirements (to insurance products with security features), application of the various treatises including Couch on Insurance 3rd and the application of the myriad of other supporting materials, all available to interpret and apply the law to a specific factual situation.

As General Counsel to the American Academy of Actuaries and later as President and Chief Executive Officer of the National Council on Compensation Insurance (NCCI), Mr. Hager had daily executive responsibilities to assure compliance of these organizations and all of their products to all applicable insurance law.

Conclusion. As an expert witness testifying in complex insurance matters, it is inevitable that a clear understanding of the application of the law to the subject transaction is a condition precedent to an effective expert opinion as to standards of care/ duty of care/ custom and practice. Mr. Hager brings this competence to every insurance expert witness assignment.

Top of Page

Surplus Lines

Issues. Surplus lines issues arise in litigation in connection with:

  1. whether the particular surplus lines carrier is authorized in the first instance to write insurance policies in the state in question;
  2. whether their policy forms and rates adhere to the law and custom and practice;
  3. whether their agents and brokers are duly licensed;
  4. whether appropriate affidavits and taxes have been submitted to the regulators;
  5. whether the insured received notice that there is no guaranty fund protection for surplus lines policies;
  6. whether the insured received notice that there is generally no department oversight over forms and rates;
  7. whether the policy actually issued by the surplus lines insurer met other state requirements (i.e., some states require that where the surplus lines binder references exclusions, it is assumed during the pendency of the binder, that standard exclusions are intended; other states have no such requirements); and
  8. whether the agents and brokers exercised due care in placing the insured with a particular surplus lines carrier in the first instance.
Of course the operative question for all of these issues is the related consequences of compliance or non-compliance.

Expertise. As a regulator (Assistant Attorney General for the Department of Insurance, First Deputy Commissioner of Insurance and Commissioner of Insurance) for eight years in an insurance intensive state, Mr. Hager has dealt directly with each of the above issues. For example, he had oversight over (i) authorizing surplus lines insurers to do business in the state in the first instance, (ii) licensing and regulating surplus lines agents and brokers, (iii) the statutory filing of related affidavits and surplus lines taxes and (iv) bringing administrative charges against surplus lines insurers where there were allegations of wrongdoing. As a member of the Executive Committee of the NAIC, Mr. Hager has dealt directly with Model NAIC Surplus Lines provisions.

On the industry side, Mr. Hager has consistently dealt with surplus lines carriers and knows both the insurers and marketplace well. As an insurance attorney in private practice, Mr. Hager has provided advice and counsel to surplus lines carriers and their agents. As an expert witness, he has qualified as a surplus lines expert and testified in a number of surplus lines cases. To the point, Mr. Hager has substantial expertise to articulate custom and practice in the surplus lines industry.

Top of Page

Industry Standards of Practice / Custom and Practice

Issue: The reasonableness and adherence to standards of practice of particular actions or inactions taken by an insurance company periodically becomes an issue in litigation. Examples include a delay or refusal to pay claims, the timing of policy issuance, etc.

Overall. Mr. Hager has pervasive and extensive experience as to the appropriateness of insurance company actions as measured against standards of practice/custom and practice, having intensely participated on both sides of insurance company decision-making for the past 25 years.

Specific Expert Testimony as to What Constitutes Standard Industry Practices.

  • Articulation of applicable standard of practice/
    custom and practice.
  • Determination of whether specific insurance company action complied with standards of practice;
  • Concluding that the particular insurance company action taken did (or did not) comply with applicable standards of practice.
Top of Page

Regulatory Standards of Practice

Issue: The reasonableness of particular actions or inactions taken by an insurance department (DOI) periodically becomes an issue in litigation. The situation arises most often as an insurance company defense. For example, when regulators fail to uncover fraud during a company examination the examined insurer alleges they should be fully or partially absolved from liability. Additionally, reinsurers and others often allege failure by a  DOI to act quickly enough in face of an impending insolvency - thus driving up the total amount of the ultimate insolvency losses.

Overall. Mr. Hager has pervasive and extensive experience as to the appropriateness of regulatory actions, having participated extensively on both sides of regulator decisions in almost all of the various states for the past 25 years.

Specific Expert Testimony as to What Constitutes Standard Regulatory Practices.

  • Articulation of applicable regulatory standards of practice
  • Determination of whether specific regulatory action actually undertaken complied with how mainstream state insurance departments handled or would have handled the particular issue;
  • Concluding that the particular regulatory action taken did (or did not) comply with standard regulatory practices.
Top of Page

Unfair Claims Practices

Issue: Most states have adopted a version of the NAIC Model Unfair Claims Practices Act. Although there are civil litigation limitations, lawsuits frequently arise alleging insurer violation of specific provisions (e.g., unfair claim settlement practices; delay in settling claims, etc.).

Overall, as to Unfair Claims Practices matters. As Insurance Commissioner, Mr. Hager administered the related statue (The NAIC Model Unfair Claims Practices Act) on a daily basis, applying it to a wide range of fact-specific situations. As an insurance industry and regulatory executive, Mr. Hager has extensive experience as to a variety of both fair and unfair insurer practices.

Specific Expert Skills as to Unfair Claims Practices Matters

  • Interpretation of the relevant unfair claims practice statutes
  • Application of that statute to a fact specific situations
  • Conclusions as to whether the law has been violated
  • Author of the Bar Review Outline (Iowa 1985-1991) Including extensive analysis of unfair claims practices
  • Relationship of the Unfair Claims Practices Act to standards of practice
Top of Page

Vanishing Premiums

Issue: Life policies sold in the mid 1980s with illustrations projecting 12% to 14% returns (preempting the need for further premiums after a few years - the premium "vanished") collapsed as rates fell, leaving insureds empty handed and alleging agent/insurer misrepresentation. Damages include (among others), the lost protection, the delta between what they were sold and what they got as well as punitives as appropriate. A number of these cases still continue to surface.

Overall, Mr. Hager has in-depth, highly technical knowledge and hands-on experience testifying in these cases. He has provided (a) damage testimony (both actuals and punitives); (b) testimony as to applicable law; and (c) testimony as to what the insurer/agents knew or should have known in connection with the illustration they produced. Specifically, Mr. Hager has testified for the plaintiffs in both Prudential Insurance Company of America cases as well as Franklin Life Insurance Company cases. As a result of this work, he has knowledge of unique provisions of applicable law and an understanding of optimum strategy.

Cases. Brasher vs. The Franklin Life Insurance Company; In the Circuit Court, Third Judicial Circuit; Madison County, Illinois; Cause No. 99-L-508. Expert testimony in a vanishing premium case on behalf of the plaintiffs.

Ribarich vs. The Prudential Insurance Company of America; In the Circuit Court of the 15th Judicial Circuit, in and for Palm Beach County, FL; Case No: CL 97-4655 AO (this is a class action case with jurisdiction in both state and federal court). Retained to provide testimony in a class action vanishing premium case on behalf of the plaintiffs.

Top of Page

Workers Compensation/Rate Making/RICO/Collusion
Rate Making

  • Challenging or Supporting a Proposed Rate Increase
  • Federal antitrust Issues relating to rate making organizations
  • Conformance of Insurers to Standard Industry Practices

Overall. As the former CEO of industry leader NCCI, Mr. Hager is uniquely positioned to provide pivotal testimony in workers compensation ratemaking cases. As necessary, he teams up with former NCCI casualty actuaries who themselves created and advocated workers compensation rate increases on behalf of NCCI. Together, they present a formidable combination to either support or resist proposed rate increases. While CEO of NCCI, Mr. Hager annually filed for rate changes affecting $16 billion of workers compensation premium.

In addition to ratemaking cases, Mr. Hager's background also positions him to provide effective expert testimony as to the workers compensation industry practices relating to:

  • Federal antitrust issues
  • Class action matters
  • Matters specific to conformance by an insurer to standard industry practices
  • RICO/Collusion matters as to workers compensation insurers and insurers in general
  • Class action matters relating to rate making organizations

Unique Skills/ Attributes

  • Leadership positions with NCCI, American Academy of Actuaries and the Iowa Insurance Department
  • Served as Hearing Officer on many Proposed Rate Increases
  • Full knowledge of the U.S. insurance regulatory community, including filing strategies and tactics
  • Can team with highly qualified actuaries and CPAs
Top of Page