On September 7, regarding the insurer’s duty to defend in a long latency occupational‑disease case, the Louisiana Supreme Court adopted the pro-rata allocation method, holding that defense costs should be prorated among insurers (based on their time on the risk during the exposure period) and the insured (based on the time during the exposure period when the insured did not have insurance coverage). In this case, with a long latency period and the insurer having limited time on the risk, the pro‑rata share of defense costs for the insurer was less than four percent.
A question is whether the Court’s ruling will extend to property-damage cases where the exposure test is used to determine an occurrence under the policy. The majority opinion and a concurring opinion by Justice Crichton stressed that long latency occupational-disease cases are “unique” and indicated that the Court’s holding should not necessarily be extended beyond cases involving long latency disease claims. However, the majority opinion and a concurring opinion by Justice Knoll also emphasized the preamble-paragraph wording in the main insuring agreement that the company will pay bodily injury or property damage “to which this insurance applies” and will defend any suit “on account of such bodily injury or property damage.”
Also, noting that other states like Texas use a joint and several allocation method where the insurers pay all defense costs, the Court did not address the question of which state’s law regarding allocation of defense costs should be used in a Louisiana case when the policy is issued to an insured in another state that has adopted the joint and several approach. Arceneaux v. Amstar Corp., 15‑0588 (9/7/16).