Decades of rapid acceleration in the pace of merger and acquisition activity on the one hand, and litigation on the other, have led to the broad recognition that an organization’s historic insurance assets were easy to lose track of—and very valuable. In particular, organizations with significant exposure to long tail liabilities including asbestos, environmental, or product liability claims have been likely to need insurance archaeology, a term that has come to denote not only recovery efforts for specific lost policies but also broad-based projects to reconstruct and organize their historic insurance portfolio.
Many organizations have found that managing insurance assets requires constant updating and maintenance. Heightened activity on three fronts—changes in corporate identity, erosion of insurance assets via insolvencies and run-offs, and a fresh surge of environmental activism—have made the task of maintaining the historic insurance portfolio more essential and more challenging than ever.
Policyholders faced with exhaustion and erosion of insurance assets have been spurred to look more closely at documenting gaps in the key programs within their portfolio. Gaps that may have seemed insignificant or manageable only a few years ago may now be critical to fill. Whether just starting an audit or focusing on gaps remaining from prior audits, the objective is clear: document as much coverage as possible and pursue solvent coverage while it is still available.
At the same time, current business conditions have heightened the difficulty of reconstructing these gaps in the historic insurance portfolio. Records disappear as a company reorganizes—often spinning off operations that later return to compete for coverage under the corporate policies. Information is also lost through the imperfect transition of legacy computer systems as well as through the inevitable layoffs attending every merger. Even organizations relatively unaffected by consolidation themselves are subject to the effects of consolidation within the insurance, brokerage, professional services, and storage industries when they seek to track down insurance records.