Insurance Expert Witness

IMS ExpertServices: Introduction to Ty Sagalow (4 min)

News: Mr. Sagalow awarded “Best Expert Witness” in Insurance by Lawyer’s International for THIRD YEAR in a row. Read his interview here.

Overview

In over 120 cases (as of Dec 2022), over 50 different law firms from across the United States, Puerto Rico and Australia representing both insurers and policyholders turn to IIG for expert witness services in insurance disputes. While with 50 testifying appearances, 6 at trial/Ct Hearings/Arbitration, Mr. Sagalow has been retained in a wide range of insurance policies, he has a specialized expertise in:

Directors and Officers Insurance (D&O)
Errors and Omissions Insurance (E&O)
Cyber Insurance
Other Financial Lines (EPLI, Crime, Fidelity Bonds, Fiduciary Liability etc.)

Mr. Sagalow’s unique combination of legal expertise (as former General Counsel for AIG’s National Union subsidiary), and underwriting expertise (as former Chief Underwriting Officer for National Union), including policy drafting experience and underwriting custom and practice, as well as claims handling process and custom and practice, all informs our innovative approach to expert services, helping our clients obtain the best possible outcomes.

Recent “Wins” (representing either carrier or policyholder)

Merck wins $1.4B summary judgement against 15 insurers. Court Decision parallels testimony by policyholder expert witness Ty Sagalow. Using theories found in policyholder expert witness Ty Sagalow report and deposition testimony New Jersey Court held that the Property Insurer’s War and “Hostile Act” Exclusion didn’t bar Merck’s $1.4B Cyber Loss because the carrier’s failure to update the old language of the exclusion to specifically refer to the new risks of cyber events misled its policyholder as to its intent to apply its old exclusion to new types of “war”. Understanding that it is an obligation of insurance carriers to update old language to “emerging risks” with an eye on the reasonable expectations of insureds, the Court reasoned “It is also self-evident, of course, that both parties to this contract are aware that cyber attacks of various forms, sometimes from private sources and sometimes from nation-states have become more common. Despite this, insurers did nothing to change the language of the exemption [sic] to reasonably put this insured on notice that it intended to exclude cyber attacks. Clearly that had the ability to do so. Having failed to change the policy language. Merck had every right to anticipate that the exclusion applied only to traditional forms of warfare.
Citing Policyholder Expert Ty Sagalow as someone with “extensive, if not almost unique, experience in underwriting D&O insurance and handling claims under D&O insurance policies”, the Hon. Barry R. Ostrager, the New York justice highly recognized for his experience and background in insurance law (see Handbook on Insurance Coverage Disputes, By Barry R. Ostrager, Ostrager, Newman, Thomas R. Newman, 2020, 20th Edition) held for the policyholder in this $11 million complex M&A case finding that based on Mr. Sagalow’s testimony on the “bump-up exclusion”, the carrier’s theory its policy excludes M&A bump-ups as an “intentional wrongful conduct” regardless of the absence of an expressed exclusion “contradicts industry custom and practice by attempting to create a ‘silent exclusion’”. The Court further sustained Mr. Sagalow’s analysis of the policy’s Allocation provision concluding that it resulted in a full limits loss under both policies in opposition to the carriers’ expert’s analysis.
Policyholders secure second victory against AIG’s “bump-up” provision as Federal Court in Virginia follows Delaware’s lead. Holding for the policyholder, the United States District Court for the Eastern District of Virginia followed the lead of the Delaware Superior Court in the Northrop case is holding against AIG in its attempt to apply its so-called “Bump-up” exclusion to exclude from covered Loss the “increased consideration” alleged paid in the Willis/Tower Watson Merger. The Court concluded, as did Delaware in Northrop, that (1) AIG’s bump-up clause while found in the policy’s definition section and not in the policy’s exclusion section was nevertheless an exclusion and would be treated as such and (2) based on the language of the exclusion and it differed from other policies in the market, it applied only to “acquisitions” and not to “mergers” of corporations. The Court further concluded that under applicable law, the Tower Watson transaction was a Merger. Ty Sagalow was the policyholder expert in both the successful Northrop (see bel0w) and Tower Watson case. As in Northrop, Mr. Sagalow successfully argued that from a viewpoint of industry custom and practice, AIG’s Bump-Up exclusion, which he wrote back in 1995 and AIG left largely unchanged in 2010 through several rewrites, turned out to be unique in the industry in several ways including its limited applicability only to acquisitions
Policyholder wins major victory against AIG’s standard “bump-up” provision . Holding for the policyholder, the Delaware Superior court in a major ruling held that AIG’s 22 year old standard bump-up exclusion did not have the breadth argued by the carrier. Among the court’s rulings were that the bump-up provision found in the definition of Loss was to be treated as an exclusion even though it was not found in the exclusion section of the policy, AIG’s particular exclusion only applies to acquisitions and not to mergers (even if the merger transaction corporately “involved” acquisitions) and that the exclusion did not apply to the particular case as a “bump-down” claim (as opposed to a “bump-up” claim), a phrase first discussed by policyholder Ty Sagalow in his expert report. Mr. Sagalow also argued that the underwriting intent and particular language of the AIG provision did not apply to merger transactions in contrast with other bump-up exclusions in the market, including those he wrote for other carriers, and generally he believed that the exclusion, which he wrote for AIG 22 yrs earlier, should be “retired” by AIG as being now hopelessly vague and ambiguous. The Court also ruled favorably to the policyholder on the policy’s prior acts exclusion adopting arguments made by Mr. Sagalow.
Policyholder successfully wins War Exclusion not applicable in 2014 Hamas attack in Israel. The Ninth Circuit of Appeals reversed the lower court holding that the terms “war” and “war-like” have special meaning under industry custom and practice as argued by policyholder’s expert, Ty Sagalow, concluding that Hamas is a terrorist organization and that the insurer whose policy did not have a terrorism excluded was incorrect in applying its war exclusions to deny coverage. Expert Ty Sagalow is quoted by reference three times in the court’s decision. In a follow up decision, the lower court on remand following the logic held that the remaining two “minor” war exclusions also did not apply. 2020 update: On the evening before trial on bad faith, the parties settled. Ty Sagalow was to be the policyholder’s bad faith expert.
Madonna’s co-composer wins $1 million against Warner Music in a contractual indemnification dispute. The Second Circuit Court of Appeals reversed the lower court finding that the indemnification language used by WB Music requiring indemnification up the amount of Warner Music’s E&O insurance deductible was ambiguous and unenforceable under the facts of the case adopting the arguments of Expert Witness Ty Sagalow.
Policyholder successfully obtains full policy limits plus interest against non-shaving excess D&O carrier. An arbitration panel decided 100% in favor of the policyholder for $16.4 million adopting arguments of Expert Witness Ty Sagalow
Seyfarth Shaw Defeats $2.6 million Malpractice Suit At Trial plus wins its counterclaim for $133K. After 2 week trial, jury in one day accepts analysis by Expert Witness Ty Sagalow
Carrier successful $20 million MSJ before Southern District of NY finding that the “P&P Lit” exclusion excluded coverage. Court accepts Expert Witness Sagalow’s argument. (Recent Update: Lower Court dismissal upheld by 2d Circuit.)
Policyholder successful $19 million MSJ in Michigan State Court finding that the carrier improperly applied the “claims first made” restriction to the insured claim directly quoting Mr. Sagalow’s expert report.
Carrier successful MSJ before State Court in CT finding no public policy prohibiting defense only E&O policies supporting Expert Witness Sagalow’s argument on industry custom and practice.
Policyholder successful $8.6 million MSJ in Illinois State Court finding that none of the several exclusions the carrier sought to apply to the insured claim in fact applied. Mr. Sagalow was named by the policyholder’s firm as “Most Helpful Witness”

A separate United States District Court also held Mr. Sagalow’s fees to be reasonable given his background and experience.

Testimonials

Mr. Sagalow has received over a dozen testimonials from Partners in both national and regional law firms. For a complete list of CLIENT TESTIMONIALS, see right column on this page.

C.V. and Selective List of Clients

For LIST OF SELECTIVE CLIENTS, see client logos at bottom or click here for list.

For a “fairly” recent copy of Mr. SAGALOW’S C.V. click here (as of 6/2022).

702 Rule Qualified

Mr. Sagalow has been successfully held to be a qualified insurance expert under rule 702 of the federal rules of civil procedure in every trial or arbitration in which he was retained as an expert. In fact, in all his matters, there has been only a single attempt to disqualify him as an expert, a so-called Daubert motion, in March 2014, which failed. Indeed, on March 27, 2014, in denying the motion the United States District Court for the Southern District of California had this to say about Mr. Sagalow’s qualifications as an insurance expert:

[Defendant’s] expert, Ty R. Sagalow, is qualified under Rule 702 by way of his experience and education. Mr. Sagalow has over 30 years’ experience as an insurance executive, and has served as both chief underwriting officer and general counsel at one of the world’s largest insurance companies. His diverse professional experience at a variety of companies in the insurance industry demonstrates a breadth of experience drafting and interpreting policies, making underwriting decisions, and claims handling….The Court concludes that Sagalow’s experience, training and education provided a sufficient foundation of reliability for his testimony. His specialized knowledge in the insurance field may be helpful to the trier of fact in understanding the evidence or determining facts in issue.

For a copy of the full decision, click here.

D&O Insurance Expert Witness Services

Directors & Officers insurance policies offer liability coverage for company managers to protect them and their Companies from claims which arise from the decisions taken within the scope of their regular duties. Since the 1980s, D&O insurance has become a very common coverage for public corporations due to an increases in large shareholder lawsuits. But, D&O is probably the least understood insurance, even among the most seasoned attorneys.

E&O Insurance Expert Witness Services

Errors & Omissions insurance, also known as professional liability insurance for professional services businesses, is an integral part of protecting your client’s business. Even if your client hasn’t made a mistake, accusations of negligence or failure to perform professional services are things that any firm can be sued. But interpreting and understanding the underlying presumptions of an E&O policy can be difficult, even for many licensed insurance professionals.

Cyber Insurance Expert Witness Services

Traditional liability products do not address Internet exposures and the risks involved. Through a company website, businesses can have some of the same exposures as publishers. These include copyright infringement, defamation and invasion of privacy, as well as emerging exposures related to operating a Website. The universe of potential plaintiffs is staggering, given the number of people and organizations currently surfing the Internet. A potential legal action and interpretation of a cyber insurance policy can prove to be costly.

Our Insurance Expert Witness Services

Expert Services may include providing expert reports and testimony in litigation or claims disputes primarily involving the “financial lines” product group, including directors and officers’ liability insurance, professional liability insurance, and security & privacy (cyber) insurance. We can also review coverage letters or draft coverage analysis for both carriers and policyholders. These services can be done in pre-litigation which can help avoid litigation altogether.

Not yet in litigation? (and hope not to be)

Bringing in an expert pre-litigation can help avoid litigation altogether. We review coverage letters or draft coverage analysis for both carriers and policyholders.

Need assistance in tracking down a good expert witness for coverage disputes outside of D&O/E&O? Through our network of partnerships, we can assist in your finding the right insurance coverage expert for your case!

Non-Litigation Related Expert Services

We also provide consultations in a wide variety of P&C insurance matters through a number of outside research organizations including AlphaSights, Atheneum Partners, CognoLink, Coleman Research Group, GLG Research, Guidepoint Advisors, and IMS ExpertServices. We have completed over 75 of these short-term engagements, which usually involve a 45 to 60 minute telephone consultation.