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Reading time: 5 minutes

Welcome to the Pride,

Each week we cut through 200+ insurance, legal, and cyber-risk articles to surface three developments your underwriting, claims, and strategy teams can act on Monday morning.

Today we’re watching:

1. Bad-Faith Forum-Shopping — Zurich’s procedural loss shows how one “home-field” statute can reshape carrier exposure.
2. The 7.1-Year Risk Window — Longer PE hold periods are widening integration failures and hidden liabilities.
3. Google’s Insurance Triple Play — Cloud, AI tools, and affirmative AI coverage arrive in one embedded package.

1 | Bad-Faith Jurisdiction Shopping

Why the Insured’s Domicile Now Sets the Rules

In a multistate portfolio claim involving a burst pipe in Manhattan, Zurich lost a key procedural ruling: New York courts confirmed that Rhode Island’s broader bad-faith statute governs the dispute—not New York law.

What happened — In Zurich Am. Ins. Co. v. Providence Capital LLC, the insureds alleged Zurich mishandled their claim under a policy covering 20 locations across six states. Zurich attempted to dismiss the bad-faith counterclaim by asserting New York’s narrower law should apply. Instead, the Appellate Division sided with Rhode Island, citing the insured’s domicile and policy issuance location.

Why it matters — This sets a precedent for policyholder-friendly jurisdictions to govern claims even when losses occur elsewhere. Carriers issuing national property and liability programs now face venue-driven severity risk where punitive statutes apply by default.

Carrier playbook

• Recalibrate legal exposure modeling. Add domicile-driven bad-faith analysis into underwriting logic—especially in states like RI, FL, CA, and NJ.
• Bolster internal guidance on choice-of-law clarity. Avoid vague language that opens the door to insured forum-shopping.
• Establish claims escalation protocols. Train litigation teams to preemptively identify venue threats before they erode procedural footing.

LION POV

We’re helping insurers revise multi-jurisdictional claims frameworks and embed venue-risk scoring into new business workflows. We also stress-test wording across state statutes to prevent future forum traps—because once the wrong statute sticks, recovery math changes fast.

2 | The 7.1-Year Risk Window

Why M&A Risk Now Outlasts the Deal Team

The math says deals are getting bigger. The risk data says integration is getting harder.

What happened — In Travelers’ 2025 M&A report, more than 9,000 deals closed through Q3 at a total enterprise value of $1.2 trillion. PE’s share rose to 43%, and hold periods lengthened to 7.1 years from just 5.7 two years ago.

Why it matters — Long holds and complex integrations mean risk architecture becomes outdated mid-cycle. Cultural mismatches, tech migrations, and cyber governance slip through the cracks—and coverage written at close rarely keeps pace with the evolving entity.

Carrier playbook

• Mandate integration reviews at renewal. Request a post-close risk audit from the insured before rolling over coverage.
• Focus on third-party exposure creep. As integrations layer vendors and SaaS tools, contractual liability grows exponentially.
• Price for process fatigue. Extended hold periods correlate with risk drift, particularly in middle-market deals without dedicated OP oversight.

LION POV
​ We guide carriers and PE-backed insureds through integration-phase risk resets, prioritizing:

• Cyber maturity benchmarks
• R&W gap checks
• Contract audits
  We also structure early renewal terms with flexible endorsements that adapt to known unknowns in year 1–3 post-close.

3 | Google’s Insurance + AI Combo

Embedded Coverage. Unmodeled Risk. Market Disruption.

Google just bundled coverage for AI failure into its cloud service contracts.

What happened — Google Cloud announced partnerships with Beazley, Chubb, and Munich Re to offer embedded, AI-specific cyber policies to cloud customers. These include coverage for hallucinations, model drift, and outages. Separately, Armilla launched an affirmative AI liability product underwritten at Lloyd’s.

Why it matters — For insurers, this is both a breakthrough and a headache. It formalizes coverage for AI perils, helping quantify risk—but also creates mass accumulation potential. One model flaw could cascade across thousands of policyholders simultaneously.

Carrier playbook

• Tighten language. Underwriters must move quickly to define coverage triggers (e.g., hallucination vs. systemic failure) with actuarial clarity.
• Flag embedded coverage loops. Platform-aligned insurance creates adoption surges—without necessarily improving risk posture.
• Reinsurer readiness. Reinsurance treaties must be revisited for silent AI exposure, aggregation corridors, and capital buffer alignment.

LION POV
​-We’re advising carriers to adopt modular AI coverage units—separate and clearly scoped—to avoid polluted general policies. We're also building AI risk playbooks for reinsurers now facing their first real systemic modeling challenge since cyber.

The Bottom Line

Bad-faith venue risk, protracted M&A integration, and first-generation AI covers are rewriting D&O, cyber, and property casualty mathematics — all to the insurer’s detriment unless proactively managed.

Protect your book before the claim arrives.

D&O Contract Vigilance Blueprint

A five-day email course that helps:

• Secure stronger D&O towers with domicile-aware wording.
• Shield personal assets of directors and officers when statutes change mid-claim.

​Get the Blueprint →​

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​https://lionspecialty.kit.com/posts/bad-faith-jurisdiction-shopping-why-the-insured-s-domicile-now-sets-the-rules​

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Stay Covered,

Natasha & Mark
​Co-Founders & Managing Partners

LION Specialty

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