Consent to Settle and Cooperation Clauses in the Wake of Babcock

This past summer, the Pennsylvania Supreme Court issued its long-awaited decision in The Babcock & Wilcox Co. et al v. American Nuclear Insurers, et al., where policyholders claimed it was unnecessary to obtain their liability insurer’s consent before settling a third party claim.  Dramatically altering the relationship between insurers and policyholders, the court held that when an insurer defends under a reservation of rights, it must indemnify its insured for any fair and reasonable settlement, regardless of whether the settlement was authorized by the insurer.

The Babcock decision has significant implications for all liability insurers writing business in Pennsylvania.  During this session, insurance industry attorneys Jason P. Gosselin and Timothy J. O’Driscoll of Drinker Biddle, and policyholder attorney Lee M. Epstein of Flaster Greenberg, discussed the merits of the Babcock decision and its implications for insurers and policyholders.