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Reading time: 5 minutes

Welcome to the Pride,

Every Friday we distill 200+ insurance, legal, and risk-management articles into three signals your board should be briefed on next Monday morning.

Three developments had us wide eyed this week:

• Florida hands insurers a 90-day safe harbor for settling claims—but the clock starts ticking only with "sufficient evidence." What qualifies remains dangerously unclear.
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• 46% of insurers run sophisticated AI operations while 71% can't integrate with legacy systems. The capability divide becomes a survival test as 475% more deepfakes flood claims departments.
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• Bad faith setups proliferate as plaintiff attorneys manufacture extra-contractual exposure. Travelers’ National Underwriting Officer breaks down why reinsurance treaties miss critical gaps that ICPL coverage can fill.

Three events that are a must read…

Florida's Bad Faith Reform: The 90-Day Window To Pay Claims

Summary

Florida fundamentally rewrote bad faith rules through HB 837, granting insurers potentially unprecedented protection.

The headline provision: a 90-day safe harbor to tender policy limits after receiving actual notice with "sufficient evidence" of a claim. No bad faith action can arise if payment occurs within this window. The statute also clarifies that mere negligence doesn't constitute bad faith—insurers need not be perfect, just reasonable.

Most intriguingly, courts can now consider claimant and attorney conduct when evaluating bad faith claims. This shifts decades of precedent that focused solely on insurer behavior.

(source)

So what?

The operational impact hits immediately. Every claims department handling Florida exposure needs protocols to identify when the 90-day clock starts—and what constitutes "sufficient evidence" remains frustratingly vague.

Medical records and police reports might suffice for auto claims. But complex commercial claims? The standard gets murky fast. Insurers who miscalculate face bad faith exposure precisely when they thought they had protection.

Early adopters are building systematic tracking for all Florida claims, calendaring deadlines from first notice, and documenting evidence sufficiency determinations.

The stakes are too high for informal processes.

Wondering how HB 837 affects your Florida exposure? Contact LION Specialty for a complimentary policy review.

The AI Arms Race: 46% Sprint Ahead While 71% Struggle with Legacy Anchors

Summary

The insurance AI market has split decisively.

Wipro's survey of 100 insurance executives reveals 46% have extensively implemented AI across operations. These leaders report transformative results—68% cite improved risk assessment accuracy and cost reduction, while 65% see enhanced compliance capabilities.

The other half faces a different reality. Legacy system integration blocks 71% of insurers from meaningful AI adoption. The technology gap compounds daily as AI leaders pull further ahead.

Investment plans tell the story: AI spending will jump from 8% of IT budgets today to 20% within five years. Early movers build on existing advantages while laggards face steeper implementation curves.

​Click here to read the full report from Wipro​

The LION Lens

What happened — Nearly half of insurers have crossed into extensive AI implementation while the majority struggle with integration barriers (source).

Why it matters — Technology capability now directly impacts competitive positioning, from claims processing speed to underwriting precision.

Practical implications — Carrier selection based solely on financial strength ignores the growing service gap between AI leaders and legacy-bound competitors.

So what?

The capability divide has become a survival test.

AI-powered insurers catch deepfakes within 14 days through behavioral biometrics and metadata analysis, while processing legitimate claims in days rather than weeks. Legacy insurers discover fraud months later, after payment, litigation, and reputational damage.

With average deepfake losses exceeding $500,000 per incident in 2024, the financial impact compounds quickly. The same technology enabling fraud provides the only reliable defense against it.

For insurance buyers, carrier technology maturity becomes a selection criterion on par with financial ratings. Why partner with a carrier whose 1990s systems will leave you explaining delays to your board?

For insurers themselves, the math is unforgiving. Deloitte projects AI-driven fraud detection could save P&C insurers $80-160 billion by 2032, but these savings concentrate among early adopters.

Each quarter of delay means competing against firms whose AI systems improve exponentially via machine learning.

The LION POV

The arms race has already begun. Here's how forward-thinking insurers are positioning:

• Partner with carriers investing heavily in detection technology; their lower fraud losses translate to better pricing and more stable coverage
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• Build AI maturity scorecards into your carrier evaluation process, weighing automation breadth against traditional financial metrics
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• In manuscript negotiations, push for service standards that reflect modern capabilities—automated claims decisions within specified timeframes

The carriers investing 20% of IT budgets in AI aren't doing it for show. They're building the infrastructure that will dominate the next decade.

Want to learn more about how we’re evaluating our carrier counterparties’ AI readiness? Contact LION Specialty. ​

When the Insurers Need Insurance: ICPL Protection Against Bad Faith Setups

Summary

Insurance companies are increasingly facing bad faith claims as plaintiff attorneys use aggressive tactics to seek damages beyond policy limits.

According to Travelers' Jonathan Wyatt, National Underwriting Officer for the Insurance Company Segment, these "bad faith setups" represent a growing concern amidst an evolving litigious environment.

While many insurers rely on reinsurance treaties with extra-contractual obligations (ECO) and excess of policy limit (XPL) provisions, these arrangements have important limitations. Reinsurance treaties typically do not provide protection for alleged errors in non-claim handling areas including risk management, loss control, or actuarial services. Additionally, nuclear verdicts may exhaust treaty limits for contractual matters, leaving no remaining coverage for extra-contractual claims.

Wyatt emphasizes that Insurance Company Professional Liability (ICPL) coverage can fill these gaps, covering both legal expenses and extra-contractual damages. ICPL policies can be structured to work either primary to or excess of reinsurance treaties, helping insurers manage risks that traditional reinsurance may not address.

(source)

So what?

Bad faith allegations create coverage coordination challenges when insurers can least afford them. The gaps are targeted and costly.

Reinsurance treaties exclude non-claims professional services like underwriting errors or actuarial consulting failures. Facultative reinsurance for unique risks rarely includes ECO/XPL protection. When nuclear verdicts exhaust treaty limits for contractual losses, nothing remains for extra-contractual exposure.

Plaintiff attorneys increasingly use aggressive tactics to manufacture bad faith scenarios, often targeting multiple operational areas to create confusion about which coverage responds. They understand these coordination gaps and structure demands accordingly.

The result: insurers face significant uncovered exposure precisely when bad faith allegations threaten both financial and reputational damage. Proper ICPL coordination with reinsurance arrangements becomes essential, not optional.

Need a comprehensive overview of insurance coverage types—including ICPL? Read our guide: Everything you need to know about financial services insurance coverage in 1 email
Then call us!

The Bottom Line

Between Florida's new bad faith defenses, the widening AI capability gap, and sophisticated plaintiff tactics, the insurance landscape demands fresh strategic thinking.

That's why we created the D&O Contract Vigilance Blueprint. It's a 5-day email course to help you:

• Secure better D&O insurance: Learn how to avoid common policy mistakes
• Protect your personal assets: Understand your potential liability

​>>> Get the D&O Contract Vigilance Blueprint​

Don't wait until a claim hits to find out your institution is under-protected.

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Stay Covered,

Natasha & Mark

Co-Founders and Managing Partners

LION Specialty