This week I continue my written interview with Stephen Kiriakou Jr., a managing director and senior attorney in Aon’s Litigation Risk Group, where he builds and places litigation risk insurance policies. Over the past two weeks, Stephen has been sharing his comprehensive knowledge with this audience, and I am pleased to present the results of our interview to these readers.
Now we move on to the remainder of my interview with Stephen, which ends with his answer to my third question. As usual, I’ve added some brief comments to his answer below.
Gaston Krupp: Given the rapid development of the P&C insurance market over the past 18 months and the challenges I have just described, what will 2024 look like in this area, both generally and with respect to IP litigation?
Stephen Kiriakou: Our team’s main focus in 2024 will remain the same as it has always been, which is to find good opportunities for clients who are looking to insure their litigation risks, not because they are worried that they will lose their case or investment but because taking out insurance will save them some money. An added benefit to them. We will continue to carefully consider these opportunities internally and work with our clients and their attorneys to present them to insurers in a way that makes their underwriting as easy and straightforward as possible. This is the approach we have used to help build this market to where it is today, and we believe this is the approach that will ensure the health and sustainability of the market long term into the future.
But as I said before, I think we will see continued growth in this area: I think deal flow will continue to increase, I think insurers will continue to hire staff and invest more in this area of their business, and I think more deals will be done with a broader range of Primary and/or leading insurance companies. I think mainstream knowledge about and acceptance of these solutions will continue to increase as well, and will lead to increased activity.
In terms of the challenges and changes we’ve seen in the market, I think some of the trends we’ve seen over the past year to 18 months will continue. I think interest rates will continue to rise slowly to the point where the historical rule of “10% to 15% online” will likely become closer to 12.5% to 17.5%, although of course there will be some clear strength and attractive risks that companies will Insurance is willing to take it at a level of 10% or even less on a deal-by-deal basis. I think we will see some cases with temporary negative developments leading to claims while other cases will exit the risk without a claim. I think other at-risk policies that have seen negative temporary developments – perhaps even most of them – will remain at risk through 2025 while these lawsuits continue. I think insurance policies to maintain judgments on patent infringement judgments will continue to be more difficult to insure because of the unique risks they represent, as this area of the market shrinks, but we will see some carriers become more open to insuring litigation funder and contingent fee law firm risks from The plaintiff side, as this area of the market grows.
I believe that Aon and other key participants in this thriving industry will continue to meet head-on some of the other challenges I mentioned earlier, and drive continued progress toward things like more insurers being willing to insure litigation funders and contingent-fee law firms. I hope we will also see some other brokers in this space, including those who have recently entered the market, be more selective about the risks they send to insurers as well, particularly with respect to patent infringement rulings. .
In summary, I expect that there will continue to be opportunities to grow our litigation and risk insurance business by leveraging greater awareness of our solutions, increased underwriting capacity among insurers, and increased sophistication among brokers, underwriters, insurance company executives, and potential purchasers of insurance. This type of coverage and their lawyers in the field of transactions and litigation. At the same time, some opportunities that would have been close in past years may face greater challenges obtaining insurance or will only be insurable at rates a few notches higher than they were two or three years ago. But it’s all part of a maturing industry that can bring a remarkable amount of value to insurers and insureds alike, and I’m very excited to see exactly what the future will hold.
A goal keeper: Stephen’s comments and outlook reflect what I said last week about the maturation process that the litigation risk insurance market continues to undergo. On the one hand, it’s good to see that insurers are getting smarter about pricing variable and perhaps even binary risks — such as trying to predict the Federal Circuit’s outcome in an appeal of a patent infringement ruling that awards large damages — for those types of risks. Risks that may provide more diversification and a longer time horizon for a potential claim. On the other hand, the continued strong market for patent judgment insurance remains an important safety valve for patent owners who continue to face challenges in convincing alleged infringers to adequately compensate them for the use of their inventions, even after a jury has found in favor of the patent owner. Given the importance of the Federal Circuit as the de facto “last word” in the vast majority of patent cases, we should continue to expect that those on the wrong side of a damages award will continue to seek appellate relief, while parties The winners below are doing everything they can to ensure their temporary victories are as great as possible. With the impact of insurance not limited to governance products, there is even more reason to believe that 2024 will certainly present some opportunities and challenges for everyone working in this exciting and evolving field.
Many thanks to Stephen for his generosity to this audience on this important topic. I wish him well in all his endeavors and I am sure that 2024 will be another year full of opportunities and creativity for the entire litigation risk insurance market. In the meantime, I’m always open to interviews of this kind with other thought leaders in the IP space, so please feel free to reach out if you have a compelling perspective to offer.
Feel free to send me comments or questions at gkroub@kskiplaw.com or via Twitter: @gkroub. Any suggestions or topic ideas are very welcome.
Gaston Krupp lives in Brooklyn and is a co-founder of Krupp, Silbercher & Kolmikov plcintellectual property litigation shop, and Markman Consulting LLC, a leading advisory firm on patent issues for the investment community. Gaston’s practice focuses on intellectual property issues and related consulting, with a strong emphasis on patent matters. You can access it at gkroub@kskiplaw.com Or follow him on Twitter: @gkroub.