Ford, Berkshire Hathaway subsidiary settle insurance dispute

WASHINGTON -- The Ford Motor Co. announced Monday it settled a lawsuit with Berkshire Hathaway Inc. subsidiary National Indemnity Co. for $22.1 million -- $2 million more than the automaker sued for in the dispute related to unpaid claims from rollover deaths.
 
"When you sue for $20 million in unpaid claims and you receive a settlement for $22.1 million, it's a good day," said Scott Oostdyk, an attorney for Ford. The case had been set for trial later this month in the United States District Court for the Eastern District of Virginia.
 
"We filed the complaint because we were experiencing no pay and slow pay," Oostdyk said, claiming National Indemnity intentionally delayed paying Ford's claims as part of a larger pattern of wrongful conduct.
 
 
Scripps discovered National Indemnity, through 25 known deals, has agreed to assume tens of billions of dollars in so-called "long-tail" insurance risk from insurers like Lloyd's of London and OneBeacon Insurance Group.
 
The long-tail policies cover asbestos and other health hazards that might take years or decades to develop into illness or a covered claim.
 
In exchange for taking on the risk, Berkshire asks insurers to hand over something called "float," the money an insurance company gets to hold between the time customers pay premiums and the time the insurer pays claims on their policies.
 
Berkshire can invest the money until it has to pay out a claim.
 
Scripps reviewed dozens of cases nationwide. In the majority of similar settlements involving National Indemnity or Resolute, the settlement amount remained confidential.
 
In this instance, Oostdyk said, Ford wanted to send a message, and refused in negotiations to settle the claim until National Indemnity agreed to let it announce the amount of the settlement.
 
New York asbestos attorney Joe Belluck said the scrutiny of Berkshire's business practices leading up to the publication of the Scripps investigation "likely played a part" in the Ford settlement before a public trial.
"Settling keeps any additional information from the public eye," he said.
 
J. Robert Hunter, head of the Consumer Federation of America's insurance division and former Texas insurance commissioner, agreed.
 
"Even Buffett reacts to press coverage," Hunter said. "Clearly, Buffett wanted to settle out while the (Scripps) story was imminent, knowing that the extra $2 million was required. After the story, it jumps much higher."
An attorney for National Indemnity, Trey Sibley, disputed Ford's claim that the automaker received more compensation in the settlement than it sued National Indemnity for.
 
"Ford made no specific claim for any sum in its complaint other than punitive and treble damages and attorneys' fees," he said. "The settlement was agreed to be confidential. So we do not believe any further comment about the case by either party to be appropriate. Ford apparently disagrees."
 
(Contact Scripps national investigative correspondent Mark Greenblatt at mark.greenblatt@scripps.com.) 
 
 
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