The insured signed up for a "retrospective rating plan." Under this plan, the insured promised to reimburse Unforgettable for its paid losses. The insurance company discovered invoices left unsent due to a computer programming error.
Notable Timestamps
[ 00:15 ] - Total Surprise Transportation promised to reimburse Unforgettable Insurance for its paid losses, including "Allocated Loss Adjustment Expenses."
[ 01:25 ] - Tim asks for his paycheck to be decreased, and Brennan gets paid to buy a workbench.
[ 02:43 ] - Usually premiums are calculated based on industry knowledge and similar businesses. Under a retrospective rating plan, an initial premium is assessed, then adjusted based on the insured's actual losses.
[ 03:55 ] - "Allocated Loss Adjustment Expenses" or ALAE are the costs associated with specific claims, and the "Unallocated Loss Adjustment Expenses" refer to more general overhead that goes into running the claims department.
[ 05:09 ] - These plans allow the insured to hang onto their cash right up until the claim settles, rather than spending their reserves throughout the process.
[ 05:58 ] - To successfully invoke laches, a defendant must prove the plaintiff delayed filing suit an unreasonable and inexcusable length of time from the time the plaintiff knew or reasonably should have known of its claim against the defendant; and (2) the delay resulted in material (financial) prejudice or injury to the defendant.
[ 08:50 ] - Equitable estoppel prevents one party who has made certain representations from taking unfair advantage of another when the party making the representations changes its position to the prejudice of the party who relied upon the representations.
[ 10:24 ] - Under the clean hands doctrine, a court sitting in equity will not provide shelter or aid to a party who seeks the benefit of their own wrongdoing. The doctrine generally does not apply to law actions like a breach of contract claim.
[ 11:33 ] - Who really has clean hands here? What would the impact be on the insured's financial situation? The team discusses fairness in this context.
[ 12:52 ] - Brennan provides a recap of the scenario and the points above.
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