Keyspan Gas East Corporation, Appellant,v.Munich Reinsurance America, Inc., Defendant, Century Indemnity Company et al., Respondents.BriefN.Y.February 6, 2018No Oral Argument Requested (!Court of ~ppeals STATE OF NEW YORK KEYSPAN GAS EAST CORPORATION, Plaintiff-Appellant, -against- MUNICH REINSURANCE AMERICA, INC., Defendant, -and- NORTHERN ASSURANCE COMPANY OF AMERICA and CENTURY INDEMNITY COMP ANY, Defendants-Respondents. APL-2016-00236 New York County Clerk's Index No. 604715/97 BRIEF OF THE COMPLEX INSURANCE CLAIMS LITIGATION ASSOCIATION AS AMICUS CURIAE IN SUPPORT OF DEFENDANTS- RESPONDENTS Laura A. F oggan CROWELL & MORING LLP 1001 Pennsylvania A venue NW Washington, D.C. 20004 (202) 624-2500 LF oggan@Crowell.com Of Counsel Sehar Sabir N.Y. Bar No. 5431762 CROWELL & MORING LLP 590 Madison Avenue, 20th Floor New York, NY 10022 (212) 895-4312 S Sabir@Crowell.com Counsel of Record TABLE OF CONTENTS Page CORPORATE DISCLOSURE STATEMENT ........................................................ 1 INTEREST OF AMICUS CURIAE ......................................................................... 1 QUESTION PRESENTED ...................................................................................... 3 SUMMARY OF ARGUMENT ................................................................................ 4 STATEMENT OF THE CASE ................................................................................ 5 ARGUMENT ........................................................................................................... 5 I. The Unavailability Exception Is Inconsistent With The Law of New York and A Growing Number of Other Jurisdictions, And Is Contrary To Sound Public Policy .................................................................................. 5 A. The Unavailability Exception Incentivizes Risky Policyholder Behavior at the Expense of Insurers .................................................... 6 B. The Unavailability Exception Frustrates the Efficient Spread of Risk by Disregarding the Insurer's Risk-Premium Calculation .......... 8 C. The Unavailability Exception Is Based on a False Premise and Cannot be Squared with Pro Rata Allocation ...................................... 9 D. The Unavailability Exception Would Result in a Windfall to the Policyholder at the Expense of the Insurer ........................................ 10 E. The Unavailability Exception Would Punish Insurers And Override Conscientious Underwriting Practices ............................... 12 II. Most Fundamentally, The "Unavailability Exception" Cannot Be Reconciled With This Court's Established Approach To Insurance Contract Interpretation ................................................................................. 14 CONCLUSION ...................................................................................................... 20 TABLE OF AUTHORITIES Page(s) Cases AAA Disposal Svs. Inc. v. Aetna Cas. & Sur. Co., 355 III. App.3d 275 (III. App. 2005) ................................................................. 11 AAA Disposal Sys., Inc. v. Aetna Cas. & Sur. Co., 821 N.E.2d 1278 (Ill. App. Ct. 2005) ............................................................. 9, 12 ACMAT Corp. v. Greater N.Y. Mut. Ins. Co., 282 Conn. 576, 923 A.2d 697 (2007) ................................................................... 2 Am. Home. Prods. Corp. v. Liberty Mut. Ins. Co., 565 F.Supp. 1485 (S.D.N.Y. 1983) ...................................................................... 9 Boston Gas Co. v. Century lndem. Co., 910 N.E.2d 290 315 (Mass. 2009) ........................................................... 8, 11, 13 Bradford Oil Co. v. Stonington Ins. Co., 54 A.3d 983 (Vt. 2011) ........................................................................................ 9 Consolidated Edison Co. of New York, Inc. v. Allstate Insurance Co., 98 N.Y.2d 208 (2002) ................................................................................. passim Crossman Cmtys. of NC. Inc. v. Harleysville Mut. Ins. Co., 717 S.E.2d 589 (S.C. 2011) ................................................................................ 10 Federated Mut. Ins. Co. v. Abston Petroleum, Inc., 967 So. 2d 705 (Ala. 2007) .................................................................................. 2 Global Reinsurance Corp. of America v. Century Indemnity Co., Slip Op. No. 124 (2017) ......................................................................... 14, 15, 19 Int'! Minerals & Chem. Corp v. Liberty Mut. Ins. Co., 168 Ill. App. 3d 361, 522 N.E.2d 758 (1st Dist. 1988) ........................................ 2 Midamerican Energy Co. v. Certain Underwriters at Lloyd's London, 2011 WL 2011374 (Iowa Distr. Ct. Apr. 13, 2011) ....................................... 9, 11 11 Munzer v. St. Paul Fire & Marine Ins. Co., 538 N.Y.S.2d 633 (N.Y. App. Div. 1989) ........................................................... 2 New England Insulation Co., Inc. v. Liberty Mut. Ins. Co., 988 N.E.2d 450 (Mass. App. 2013) ................................................................... 10 Pilkington N Am., Inc. v. Travelers Cas. & Sur. Co., 112 Ohio St. 3d 482, 861N.E.2d121 (2006) ...................................................... 2 Selective Ins. Co. of Am. v. County of Rensselaer, 26 N.Y.3d 649 (2016) .................................................................................. 14, 15 Spartan Petroleum Co. v. Federated Mut. Ins. Co., 162 F.3d 805 (4th Cir. 1998) ................................................................................ 9 Sybron Transition Corp. v. Security Ins. Co., 258 F.3d 595 (7th Cir. 2001) ........................................................................ 10, 11 Travelers Ins. Co. v. Eljer Mfg. Co., 197 Ill. 2d 278, 757 N.E.2d 481 (2001) ............................................................... 2 Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 N.Y.3d 470 (2004) .......................................................................................... 14 In re Viking Pump, Inc., 27 N.Y.3d 244 (2016) ............................................................................ 15, 17, 18 Other Authorities (22 NYCRR) §500.1(£) .............................................................................................. 1 Developments in the Law - Toxic Waste Litigation, 99 Harv. L. Rev. 1573, 1575-76 (1986) ........................................................................................... 7 George Robertson Murphy, III, Asbestosis Litigation: Prescription, Contribution, Exposure, Insurance, and the Public Interest-A Case note on Cole v. Celotex Corp., 54 La. L. Rev. 467, 480 (1993) .......................................................................... 10 Michael G. Doherty, Allocating Progressive Injury Liability Among Successive Insurance Policies, 64 U. Chi. L. Rev. 257, 281 (1997) ................... 7 lll CORPORATE DISCLOSURE STATEMENT Pursuant to the Rules of the Court of Appeals (22 NYCRR) §500.l(f), the Complex Insurance Claims Litigation Association ("CICLA") states that it is a trade association incorporated under the laws of Delaware. It has no parents, subsidiaries, or affiliates. INTEREST OF AMICUS CURIAE The Complex Insurance Claims Litigation Association ("CICLA") is a trade association of major property and casualty insurance companies. 1 CICLA members provide a substantial percentage of the liability coverage written in New York, and have issued many policies containing terms similar or identical to those at issue here. Du.e to its members' extensive experience with the insurance policy provisions before the court, CICLA has a unique perspective on the issues presented. CICLA also offers its insights on the importance of this case for insurance underwriting. 1 This brief is not filed on behalf of CICLA member Chubb and Son, a division of Federal Insurance Company, whose affiliate Century Indemnity Company is a party to this appeal. CICLA has participated in significant insurance cases throughout the country, including other cases before this court.2 In other complex insurance matters, courts have cited CICLA's contributions as amicus curiae approvingly in their decisions.3 CICLA respectfully submits that its participation in this case is desirable and will assist this Court. CICLA seeks to appear in this case because it presents an insurance coverage issue of direct importance to CICLA's members, and of growing importance nationwide. In this appeal, this Court is asked to decide whether certain insurers can be required to provide coverage for periods beyond those which they agreed to cover in their policies, on the grounds that insurance coverage allegedly was "unavailable" to the policyholder during those periods. This is a question of 2 See, e.g., Millennium Holdings LLC and The Northern Assurance Co. of America, et al, v. The Glidden Co., No. APL-2015-00048 (N.Y.); In re Viking Pump, Inc., No. CTQ-2015-00003 (N.Y.); Keyspan Gas East Corp. v. Century Indemnity Co., No. APL-2013-00216 (N.Y.). 3 See, e.g., Federated Mut. Ins. Co. v. Abston Petroleum, Inc., 967 So. 2d 705, 711 (Ala. 2007) (citing with approval to the arguments regarding a pollution exclusion made by CICLA in support of the party-insurer); ACMAT Corp. v. Greater N. Y. Mut. Ins. Co., 282 Conn. 576, 593 n.14, 923 A.2d 697, 708 n.14 (2007) ("Indeed, we find more persuasive the argument of the amicus curiae [CICLA] that [the policyholder's] position assumes too much and sweeps too far."); Pilkington N Am., Inc. v. Travelers Cas. & Sur. Co., 112 Ohio St. 3d 482, 485 n.l, 861 N.E.2d 121, 125 n.l (2006) ("The court acknowledges with appreciation the briefs provided by amici curiae ... the Complex Insurance Claims Litigation Association."); Travelers Ins. Co. v. Eljer Mfg. Co., 197 Ill. 2d 278, 313, 757 N.E.2d 481, 502-03 (2001) (stating that the court "agree[ d] with the observation of amicus" and quoting from its brief); Munzer v. St. Paul Fire & ,Marine Ins. Co., 538 N.Y.S.2d 633, 636 (N.Y. App. Div. 1989) (noting that the Association's submissions reflect "[t]he concern of the insurance industry"); Int 'l Minerals & Chem. Corp v. Liberty Mut. Ins. Co., 168 Ill. App. 3d 361, 370, 522 N.E.2d 758, 764 (1st Dist. 1988). 2 first impression for this Court, and this Court's answer will have a substantial impact on the entire insurance industry, including CICLA and its members. CICLA's brief will demonstrate that an insurer whose policy language expressly limits coverage to damages occurring "during the policy period" is not responsible to pay damages that a policyholder incurred during later, uninsured periods. To hold otherwise would disregard the clear language of the contracting parties' agreement. It also would permit policyholders who assumed the risk of loss with full knowledge that they lacked insurance to retroactively shift the consequences of their actions to insurers who never agreed to assume that risk. As the Appellate Division recognized in its decision below, this approach is at odds with established New York law regarding the interpretation and application of insurance agreements. Furthermore, as CICLA will demonstrate, the "unavailability exception" urged by the Plaintiff-Appellant contradicts both sound public policy and the prevailing approach in insurance allocation law. QUESTION PRESENTED Whether the Appellate Division correctly held that an insurer who agreed to provide coverage only for damages occurring "during the policy period" cannot be required to cover damages outside that period on the grounds that other insurance allegedly was unavailable to the policyholder during those years. 3 SUMMARY OF ARGUMENT As the Appellate Division correctly found in its decision below, under New York law insurance coverage disputes are governed in the first instance by the relevant policy language. In this case, there is no dispute that the policies provide coverage for loss arising from an occurrence "during the policy period." Similarly, there was no dispute before the Appellate Division that this policy language required pro rata allocation, so as to give effect to this limiting language. Nevertheless, Plaintiff-Appellant argues that this Court should recognize an exception to pro rata allocation under the policies at issue for all periods where insurance allegedly was "unavailable." The policyholder's proposed invention of additional coverage obligations through an "unavailability exception" is inconsistent with established New York law and sound public policy. The proposed unavailability exception flies in the face of this Court's prior decisions reinforcing the primacy of the policy language when resolving insurance coverage disputes. In practice, this exception would abrogate the terms of insurance contracts by requiring insurers to cover loss associated with uninsured periods periods which by definition are outside the scope of the insuring agreement. Furthermore, it would provide free coverage to uninsured policyholders who chose to engage in risky behaviors, while simultaneously prejudicing insurers who consciously chose not to assume those risks. 4 This is neither an efficient transfer of risk nor a desirable result, as a growing number of state and federal courts have recognized. Accordingly, CICLA urges this Court to affirm the Appellate Division's refusal to recognize the proposed "unavailability exception" to pro rata allocation in this dispute. STATEMENT OF THE CASE CICLA adopts the Statement of the Case found in the Brief of Defendant- Respondent Century Indemnity Company. The most critical fact- and one that CICLA views as dispositive - is that all of the insurance policies in this case expressly limit the insurer's coverage obligations to "occurrences, accidents and continuous and repeated exposure to conditions that result in damage 'during the policy period."' A-654-55. Honoring and reaching the only outcome consistent with this insurance contract language, the Appellate Division declined to adopt an "unavailability exception" to pro rata allocation, finding that doing so would subject the insurers to "risks beyond those contemplated by the parties when the policies were purchased." A-655. This appeal followed. ARGUMENT I. THE UNAVAILABILITY EXCEPTION IS INCONSISTENT WITH THE LAW OF NEW YORK AND A GROWING NUMBER OF OTHER JURISDICTIONS, AND IS CONTRARY TO SOUND PUBLIC POLICY. The proposed unavailability exception is inconsistent with sound public policy, as well as legal precedent in New York and beyond. The so-called 5 unavailability exception to pro rata allocation has the potential to incentivize policyholders to engage in risky behaviors, while simultaneously prejudicing insurers by imposing liability for risks they never agreed to assume. Furthermore, a growing number of jurisdictions have recognized that the exception is based on a false premise - namely, that insurance coverage can be truly "unavailable." In light of this, CICLA urges this Court to affirm the well-reasoned decision of the Appellate Division, rejecting the proposed "unavailability exception" to pro rata allocation, which would artificially expand the insurers' obligations beyond the terms of their insurance contracts. A. The Unavailability Exception Incentivizes Risky Policyholder Behavior at the Expense of Insurers. Of the many objectionable aspects of the proposed unavailability exception, perhaps the most troubling is its potential effect on policyholder behavior. In Con Ed, for instance, this Court recognized that"[ e ]specially in the environmental pollution context," courts should favor "a result [that] provides the insured with an incentive to strive for early detection that it is releasing pollutants into the environment." 98 N.Y.2d at 220 (quotations omitted). An unavailability exception works the opposite result in two ways. First and foremost, the unavailability exception incentivizes risky behavior by providing policyholders with free insurance coverage. "By tailoring premiums to the level of risk incurred, insurance forces insured companies to internalize the 6 costs of their activities" and "assess and manage their risks" Developments in the Law-Toxic Waste Litigation, 99 Harv. L. Rev. 1573, 1575-76 (1986). However, under an unavailability rule such as that advocated here, policyholders would have "insufficient incentives to avoid risky activities." By permitting policyholders to engage in risky conduct without bearing the costs of that behavior - either in the short term through increased premiums or in the long run through potential exposure to third-party liability - an unavailability exception would work an unfair and undesirable result. Additionally, the unavailability exception reduces the incentive for insureds to discover and limit progressive injury damage. It is axiomatic that the longer a progressive injury continues undiscovered, the more policy periods will be implicated in the loss. Accordingly, under the traditional pro rata method for allocating loss, uninsured policyholders are incentivized to investigate and discover progressive injuries, so as to limit their own potential exposure. The unavailability exception removes that incentive, however, by requiring the insurer to assume that risk. "If insurers pay more of the insured's liability, the insured must pay less and consequently will be less concerned about limiting injury." Michael G. Doherty, Allocating Progressive Injury Liability Among Successive Insurance Policies, 64 U. Chi. L. Rev. 257, 281 (1997). 7 ----------------------------~····-~····~ B. The Unavailability Exception Frustrates the Efficient Spread of Risk by Disregarding the Insurer's Risk-Premium Calculation The unavailability exception also frustrates one of the main goals of insurance namely, the efficient spreading of risk. Before insurers issue insurance policies, they carefully evaluate the attendant risks, in order to determine the amount of premium they must charge in order to offset their potential losses. By carefully evaluating the potential for loss associated with a given exposure, insurers are able to minimize their potential losses, and remain solvent. This in tum ensures that insurance is available at reasonable premiums to a larger pool of potential insureds. The insurance market only operates effectively if the risk assumed by the insurance industry is reflected in the premiums that insurers actually receive. The unavailability exception upsets this balance by retroactively providing policyholders with coverage for periods in which they paid nothing, including years in which "insurers made the calculated decision not to assume risk and not to accept premiums." Boston Gas, 910 N.E.2d at 315. This "free" insurance does not efficiently transfer risk. Rather, it provides policyholders with an inequitable windfall that comes at the expense of both the insurer and other potential policyholders. Courts and commentators recognize that this type of free coverage would ultimately make insurance itself more expensive, because "in the long run 8 insurance companies must pass on [the] price [of increased coverage] or must themselves suffer hardship or failure." Am. Home. Prods. Corp. v. Liberty Mut. Ins. Co., 565 F.Supp. 1485, 1511 (S.D.N.Y. 1983). This would result in more expensive, and possibly non-existent, insurance in the future. This is precisely why New York courts do not invoke equity to extend an insurance policy beyond its fair intent and meaning. Breed, 46 N.Y.2d at 355. C. The Unavailability Exception Is Based on a False Premise and Cannot be Squared with Pro Rata Allocation The Appellate Division's refusal to recognize an unavailability exception is consistent with the decisions of courts from a number of other jurisdictions.4 In rejecting the unavailability exception to pro rata allocation, many of these courts recognized that "unavailability" of insurance is an illusory notion. It should not serve as the basis for exempting an insured from accountability for loss during its uninsured periods. The question is not whether certain coverage is or is not available, but at what level the insurance market prices the coverage that is available. In this fashion, courts addressing the issue have perceptively questioned the entire concept of unavailability. As the United States Court of Appeals for the 4 See, e.g., See, e.g., Bradford Oil Co. v. Stonington Ins. Co., 54 A.3d 983, 991 (Vt. 2011) (declining to recognize an unavailability exception to pro rata allocation); AAA Disposal Sys., Inc. v. Aetna Cas. & Sur. Co., 821N.E.2d1278, 1290 (Ill. App. Ct. 2005) (same); Spartan Petroleum Co. v. Federated Mut. Ins. Co., 162 F.3d 805, 807 n.1, 813 (4th Cir. 1998) (same); Midamerican Energy Co. v. Certain Underwriters at Lloyd's London, 2011 WL 2011374, at *3 (Iowa Distr. Ct. Apr. 13, 2011) (same). 9 Seventh Circuit noted in a case addressing the availability of coverage for asbestos liabilities after 1985: "[W]e do not know what it means (or could mean) to say that coverage for a particular risk is 'unavailable.' Unavailable at what price?" Sybron Transition Corp. v. Security Ins. Co., 258 F.3d 595, 599 (7th Cir. 2001); see also id. at 599-600 (criticizing the assumption that coverage can be either "available" or "unavailable" because it treats insurance "as if it were on or off like a light bulb rather than a commodity whose price may be attractive or unattractive to a given customer"); George Robertson Murphy, III, Asbestosis Litigation: Prescription, Contribution, Exposure, Insurance, and the Public Interest-A Casenote on Cole v. Celotex Corp., 54 La. L. Rev. 467, 480 (1993) (indicating that, although most insurance policies now contain an "asbestos exclusion clause," some insurance coverage for asbestos-related liabilities is still available for higher premiums). D. The Unavailability Exception Would Result in a Windfall to the Policyholder at the Expense of the Insurer. Sybron and other decisions also have noted the disconnect between the principle that an insurer can be liable only for its time on the risk, and the notion that responsibility for periods of self-insurance when insurance allegedly was not "available" can magically be shifted from the policyholder to an earlier insurer whose policy was not in place during the applicable timeframe. Sybron, at 600; see also New England Insulation Co., Inc. v. Liberty Mut. Ins. Co., 988 N.E.2d 450 (Mass. App. 2013); Crossman Cmtys. of N.C. Inc. v. Harleysville Mut. Ins. Co., 10 717 S.E.2d 589, 602 (S.C. 2011); Midamerican Energy. Co. v. Certain Underwriters at Lloyds. London, No. CL 107142, 2011 WL 2011374 (D. Iowa Apr. 13, 2011); AAA Disposal Svs. Inc. v. Aetna Cas. & Sur. Co., 355 III. App.3d 275 (III. App. 2005). As Sybron points out, "[t]he whole idea of a time-on-the-risk calculation is that any given insurer's share reflects the ratio of its coverage (and thus the premiums it collected) to the total risk." Sybron, at 600. Even if insurance could be considered "unavailable" at certain periods during which the loss took place, allowing such an exception to the allocation rule will result in the insurer paying more than it bargained for, and the insured receiving an unwarranted windfall. Id. ("To require [the insurer] to pay extra because [the policyholder] did not find it cost-effective to purchase coverage during 1986 to 1988 would be the economic equivalent of requiring [the insurer] to furnish free coverage during 1986-88."). Courts in other jurisdictions rejecting the notion of insurance unavailability have also cited the unfairness of requiring an insurer to provide coverage for losses taking place outside of the periods it agreed to cover. The Supreme Judicial Court of Massachusetts, in adopting the pro rata allocation rule, refused to incorporate any unavailability exception "because to do so would contravene the limitation in the ... policies to liability attributable to ... damage during the policy periods." Boston Gas, 910 N.E.2d at 315. As an Illinois appellate court explained: 11 [D]amages for the years that an insured carried no insurance must be allocated to the insured. To allocate these damages to the insurer would be unfair .... Because the policy periods contained in the ... policies do not include the years plaintiffs went uninsured, we fail to understand why [the insurer] should have to bear the costs from that period. We understand that insurance coverage was not available for the period at issue, but [the policyholders] cannot shift responsibility for the uninsured years to [the insurer]. See AAA Disposal Sys., Inc. v. Aetna Cas. & Sur. Co., 821N.E.2d1278, 1290 (2005) (citations omitted). Once unavailability is properly understood as a question of the price of available coverage, the inequity of the policyholder's position is even more apparent. By "creating" coverage for years in which it was not purchased, this approach would unfairly equate a policyholder who consistently purchased insurance, even at high premiums in a marketplace where asbestos-related risks were apparent, with one who had purchased insurance coverage for only a single year. E. The Unavailability Exception Would Punish Insurers And Override Conscientious Underwriting Practices. · Furthermore, this proposed "unavailability exception" would punish insurers who carefully audit the risks they've assumed, and decline to extend policies to cover risks that they are unwilling to cover. Assume for instance that an insurer cancels, or declines to renew, coverage with a policyholder after learning that the 12 policyholder began storing certain hazardous materials on its premises in the last month of its current insurance coverage. Unbeknownst to either the insurer or the policyholder, these materials began to leak and contaminate the surrounding area during the insurer's policy period, and continued to do so for ten later years. The insurer's decision to discontinue coverage at the close of its initial policy period reflects not only its desire to limit its future exposure to risks associated with that policyholder, but also its evaluation of its ability to assume those risks as a business. The unavailability exception urged by the Plaintiff- Appellant, however, would disregard this calculated business decision, and would require the insurer to provide coverage for damages occurring during periods that it never agreed to cover. This is inconsistent with basic principles of contract law, and is contrary to sound public policy. See Forty-Eight Insulations, 633 F.2d at 1225 (noting that "[n]either logic nor precedent" support adopting a position in which an insured who "had insurance coverage for only one year out of 20 would be entitled to a complete defense of all asbestos actions the same as [an insured] which had coverage for 20 years out of 20") (internal citation omitted); see also Boston Gas Co. v. Century Indem. Co., 910 N.E.2d 290 315 (Mass. 2009) (noting that "unavailability exception" would permit policyholders to obtain coverage for losses insurers had determined were uninsurable). 13 II. MOST FUNDAMENTALLY, THE "UNAVAILABILITY EXCEPTION" CANNOT BE RECONCILED WITH THIS COURT'S ESTABLISHED APPROACH TO INSURANCE CONTRACT INTERPRETATION. The sound public policy considerations above reinforce what New York law requires, i.e., that the Appellate Division's decision must be affirmed and the invitation to invent an "unavailability exception" must be rejected. A contrary ruling would be inconsistent with established New York precedent, and would undermine a fundamental premise of the insurance system: that a risk that is not transferred is retained. Under New York law, the predominant consideration in any insurance coverage dispute is the language of the insurance policy at issue. See, e.g., Consolidated Edison Co. of New York, Inc. v. Allstate Insurance Co., 98 N.Y.2d 208 (2002) ("Con Ed'). This Court's decisions consistently have reaffirmed the primacy of the policy language itself in resolving any insurance coverage dispute. Id.; see also Roman Catholic Diocese of Brooklyn, 21N.Y.3d139, 148 (2013); Selective Ins. Co. of Am. v. County of Rensselaer, 26 N.Y.3d 649, 655 (2016); Global Reinsurance Corp. of America v. Century Indemnity Co., Slip Op. No. 124, at 12 (2017). In doing so, this Court has stressed that "courts should be extremely reluctant to interpret an agreement as impliedly stating something which the parties have neglected to specifically include." Global Reinsurance Corp., Slip Op. No. 124 at 12-13 (quoting Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 14 N.Y.3d 470, 475 (2004)). If an insurance contract "is reasonably susceptible of only one meaning, a court is not free to alter the contract to reflect its own personal notions of fairness and equity." Id. at 13 (quoting Selective Ins. Co., 26 N.Y.3d at 655). Rather, courts applying New York law "must 'look to the language of the policy' above all else." Id. (quoting In re Viking Pump, Inc., 27 N.Y.3d 244, 257 (2016)). Consistent with this approach to insurance contract interpretation, this Court consistently has held that when a policy unambiguously covers damage only from occurrences that happen during the policy period, the insurer cannot be held liable for any damage resulting from occurrences that happen before or after the policy period. See, In re Viking Pump, Inc., 27 N.Y.3d 244, 259-62 (2016) ("Viking Pump"); see also Con Ed., 98 N.Y.2d at 224. Despite this precedent, however, and despite the fact that the policy language at issue in this case expressly limits coverage to occurrences that result in damages "during the policy period," the Plaintiff-Appellant urges this Court to adopt an "unavailability exception" to pro rata allocation. Plaintiff-Appellant would require its insurers to assume liabilities associated with any periods where the policyholder was uninsured due to the alleged "unavailability" of insurance - periods which by definition fall outside the scope of coverage the insurer agreed to provide in its insurance contract. This 15 approach is inconsistent established precedent, and cannot be reconciled with New York's approach to interpreting insurance contracts. In Con Ed, this Court established as a matter of New York law that absent explicit language to the contrary, the phrase "during the policy period" is an effective temporal limitation on an insurer's assumption of risk. The policies at issue provided coverage for damages resulting from an accident "during the policy period." Notably, the policies did not address how losses spanning multiple policy periods would be allocated. However, under New York's policy-centric approach to resolving insurance disputes, this Court found that pro rata allocation based on each insurer's relative time on the risk was the proper approach. Id. at 222-23. The Court found that this approach was consistent with the policy language, and was the only means of allocation that limited the insurer's liability to losses incurred by the policyholder "during the policy period," as required by the policies. Id. In reaching this conclusion, the Court expressly rejected the notion that an insurer providing coverage under these terms could have coverage responsibilities for damages resulting from occurrences taking place either before or after the policy period. Con Ed., 98 N.Y.2d at 224. An insurer's grant of coverage for damages resulting from occurrences "during the policy period" was just that - a grant of coverage for loss associated with that predetermined period - and nothing more. Id. This Court subsequently has emphasized the importance of the phrase 16 "during the policy period" as a term limiting the scope of coverage afforded under an insurance agreement. See, e.g., Roman Catholic Diocese of Brooklyn, 21 N.Y.3d at 154 (construing policy providing coverage for "bodily injury [that] 'occurs during the policy period' and is caused by an 'occurrence,"' and concluding that, "[p ]lainly, the policy's coverage is limited only to injury that occurs within the finite one-year coverage period of the policy"). Recently, this Court had occasion to clarify the extent of its pro rata allocation ruling in Viking Pump. Much like the policies at issue in this case and in Con Ed, the policies at issue in Viking Pump contained "during the policy period" language. Unlike the policies involved in this case and in Con Ed, however, this Court found that the policies in Viking Pump contained additional language -- non- cumulation/prior insurance provisions -- that contemplated coverage for damage from occurrences outside the period. Viking Pump, 27 N.Y.2d at 259-62. Because of this, the Court found that it would be appropriate in that dispute to apply an "all sums" approach to allocation of damages - because it found that policies containing noncumulation provisions plainly contemplate that multiple successive insurance policies can indemnify the insured for the same loss or occurrence. Id. Although they are divergent in result, this Court's decisions in Con Ed and Viking Pump are easily harmonized, as each underscores the importance of the policy language at issue when evaluating the rights and obligations of parties to a 17 contract of insurance. Under New York law, "the contract language controls the question of allocation," not general "policy concerns." Id. at 257. As such, absent specific policy language that extends coverage outside the policy period, an insurer's liability "is limited to sums incurred by the insured during the policy period," meaning that "each insurance policy is allocated a 'pro rata' share of the total loss representing the portion of the loss that occurred during the policy period." Id. at 256. This Court's decisions in Con Ed and Viking Pump also both reflect the fundamental premise underlying the insurance marketplace that "any risk not transferred to an insurer is retained by the insured." In Con Ed, as in this case, the insurance policies did not contemplate coverage for loss occurring outside the policy period. Accordingly, the only risk assumed by the insurer was the risk of loss occurring within the specified policy period. The risk for all loss occurring outside that policy period was retained by the insured. As such, it was the insured's responsibility to determine how to best manage the potential for loss for those periods, either by obtaining additional insurance policies, choosing to self- insure, or modifying its business activities to mitigate the potential for loss. By contrast, in Viking Pump this Court found that the insurance policy contemplated coverage for loss occurring outside the policy period. This meant that the insurer agreed to accept the risk for loss both within and without the policy 18 period. Accordingly, the insured could not be said to have solely retained the risk of loss occurring outside of its insurance policy periods. This Court recently recognized in Global Reinsurance, New York's principles of insurance contract interpretation "do not permit a court to disregard the precise terminology that the parties used and simply assume, based on its own familiar notions of economic efficiency" that the parties intended their agreement to have another meaning. Global Reinsurance, Slip Op. No. 124 at 14. However, that is precisely what the Plaintiff-Appellant now urges this Court to do. The proposed unavailability exception to pro rata allocation is contrary to both the plain language of a policy providing coverage for loss "during the policy period" and the foundational textual premise of pro rata allocation itself. The premise of pro rata allocation is that an insurer cannot be held liable for damage resulting from occurrences outside the period covered by its policies. Whereas pro rata allocation gives effect to the "during the policy period" language by apportioning risk based on each insurer's time on the risk, an unavailability exception would intentionally allocate to each policy more than the insurer's pro rata share. Such a result is "inconsistent with the unambiguous language of the policies" which limit coverage to loss within the policy period. Con Ed., 98 N.Y.2d at 224. It also disregards the fundamental premise that any risk that is not transferred to an insurer is retained by 19 the insured. As such, an unavailability exception to pro rata allocation simply cannot be reconciled with New York's approach to insurance policy construction. CONCLUSION For the foregoing reasons, amicus curiae Complex Insurance Claims Litigation Association respectfully urges this Court to affirm the Appellate Division's finding that an "unavailability exception" to pro rata allocation is inconsistent with New York law, and that insureds must bear the full risks of their own uninsured periods. December 28, 2017 Respectfully submitted, ehar Sabir, Esq. CROWELL & MORING LLP 590 Madison Avenue, 201h Floor New York, NY 10022 (212) 233-4000 S Sabir@Crowell.com Counsel for Amicus Curiae 20 CERTIFICATION I certify pursuant to §500.13(c) of the Rules of Practice of this Court that the total word count for all printed text in the body of this brief is 4,5 85 words. December 28, 2017 ~E- Sehar Sabir, Esq. CROWELL & MORING LLP 590 Madison Avenue, 20th Floor New York, NY 10022 (212) 233-4000 SSabir@Crowell.com Counsel for Amicus Curiae 21