Insurance Insights December 2025

www.alston.com Insurance Insights December 2025

2 A Note from the Insurance Team As we reflect at year-end, we note how many areas of law now affect the insurance industry. Insurance company general counsel are called upon to navigate AI and tech issues, data privacy law, litigation strategy, and ever-more-complex financial structures. We strive to bring you insights that help connect dots across these diverse and evolving areas. We wish you and your families a wonderful holiday season. - Alston & Bird Insurance Team The Supreme Court’s 2025–26 term is underway with 39 cases on the docket, many drawing national attention. Though none directly involve insurance disputes, three civil procedure cases could quietly impact insurers’ decisions about removing cases to federal court. Here’s what we’re watching: Jurisdictional Jenga – Can Improper Removal Bring It All Down? Hain Celestial Group v. Palmquist, No. 24-724 (U.S.). A Texas mother sued Whole Foods and Hain Celestial Group, claiming high levels of metals in a baby food product harmed her child. If the case were only against manufacturer Hain Celestial, complete diversity would exist. Hain Celestial removed the case to federal court, where it successfully argued that Whole Foods had been fraudulently joined to defeat diversity. The district court dismissed Whole Foods and retained jurisdiction. After two years of litigation and a two-week trial, the district court granted judgment as a matter of law to Hain Celestial. But the Fifth Circuit reversed, finding that Whole Foods had been erroneously dismissed and that the case must go back to state court to start from scratch. Defendants that remove to federal court face risk when jurisdiction is unclear. If the federal court is ultimately found to lack jurisdiction, years of effort and a favorable result can be undone, giving the plaintiff a do-over. The Supreme Court’s upcoming decision promises to shape how big a gamble it is to argue for removal to federal court using the “fraudulent joinder” doctrine. Two questions are before the Court: 1. Whether a district court’s final judgment as to completely diverse parties must be vacated when an appellate court later determines that it erred by dismissing a non-diverse party at the time of removal. 2. Whether a plaintiff may defeat diversity jurisdiction after removal by amending the complaint to add factual allegations that state a colorable claim against a nondiverse party when the complaint at the time of removal did not state such a claim. The answers to these questions could impact cases when, for example, an insured sues her insurer and also names her local agent or broker to destroy diversity jurisdiction. At a November 4 oral argument, the Justices sounded poised to rule that the reversal of dismissal of a party for fraudulent joinder destroys the federal court’s diversity, and that Hain Celestial’s win must be vacated. As Justice Sotomayor said: The rule is very simply this plaintiff filed in the forum it wanted and it filed appropriately. It filed against a nondiverse defendant. It was entitled to stay in state court. And it wasn’t required to drop a … defendant that it didn’t want to drop. n 3 Removal Deadline on the Line – Can Courts Bend the 30-Day Rule? Enbridge Energy LP v. Nessel, No. 24-783 (U.S.). Defendants have 30 days to remove a case to federal court after receiving the complaint (or other paper from which it may first be ascertained that the case is removable). For non-jurisdictional deadlines, courts typically maintain equitable power to excuse noncompliance in exceptional circumstances. But many courts have found that the statutory 30-day removal deadline is mandatory. This question reaches the Supreme Court after Michigan’s attorney general litigated for two years in state court seeking to shut down an underwater pipeline for environmental reasons before removing the case to federal court. The district court excused the delay, finding that parallel federal litigation and the federal nature of the matter were “exceptional circumstances.” The Sixth Circuit reversed, finding that the statutory deadline does not permit equitable exceptions. The Court’s ruling could cement a uniformly strict 30day deadline or could reshape the procedural limits governing removal. n In Federal Court, Whose Rule Is It Anyway? Berk v. Choy, No. 24-440 (U.S.). Shaking up the long-standing Erie framework for applying federal procedural rules and state substantive law in diversity actions, in 2010 the Supreme Court decided in Shady Grove that the Federal Rules of Civil Procedure apply in federal court whenever they answer “the same question” as a state statute or rule. The Court sought a clear rule, but whether a conflict exists between the federal rules and state law has not always been clear. The Court may provide more clarity this term in a medical malpractice action. Under Delaware law, medical malpractice complaints are dismissed unless accompanied by an expert affidavit attesting to the defendant’s negligence. Federal courts have split in their treatment of similar state-law requirements. The Justices’ comments at an October 6 oral argument were mixed. For example, Justice Kagan said: [T]he entire thrust of the federal rules, most particularly in Rule 8 and 9, … was meant to establish a notice/pleading system where all you had to do was to say: “Here I am, here’s my claim, I’m going to be seeking damages, the end,” and everything else was supposed to happen later in the normal course of things. And then a defendant had a bunch of different opportunities, starting with Rule 12 and then continuing on with Rule 56 summary judgment, or using summary judgment even pre-discovery in various circumstances, to get rid of the suit. And that’s basically the structure of the federal rules. But Justice Jackson responded: Can I just go back for a second to Justice Kagan’s point about notice/pleading? Because as I understood it, this affidavit of merit is not discoverable, it’s not evidentiary, it can’t be admitted, it’s sort of a black-box thing. So why isn’t that consistent still with a notice/pleading kind of scenario? The Court’s ruling could have broader implications for insurers, including where they provide coverage of statelaw claims that carry similar affidavit requirements, which state laws regulate actions against insurers (such as direct action statutes allowing parties injured by an insured to sue the insurer directly), and the analysis of what law will apply after lawsuits are removed to federal court. n Supreme Court Watch: Shaping Removal to Federal Court

Life Insurance Don’t Forget the Filed-Rate Doctrine Day v. GEICO Casualty Co., No. 24-2201 (9th Cir. July 9, 2025). In the early months of the COVID-19 pandemic, the stillness on once-congested roads led to a change in loss exposures for auto insurers. Days before a California Department of Insurance (CDI) mandate for all auto insurers, GEICO announced its Giveback program to partially refund premiums to insureds. In accordance with requirements in later CDI bulletins, GEICO submitted data to show that its premium refunds adequately accounted for the lower risk of loss. By Zoom meeting and email, the CDI confirmed that GEICO’s methodology and calculations were sufficient. The plaintiff filed a putative class action claiming that GEICO’s premiums during the pandemic were unfair under California’s Unfair Competition Law. California’s Insurance Code provides a safe harbor against liability for insurance rates previously approved by the CDI, but the district court found that the safe harbor did not apply because the plaintiff was challenging the application of approved rates, not the ratemaking process. The Ninth Circuit reversed and granted summary judgment to GEICO, holding that the safe harbor barred the plaintiff’s challenge to the premium rates that were applied to her policy and had been approved by the CDI. The filed-rate doctrine varies by state, and in some states its scope is unsettled. The Ninth Circuit’s ruling strengthens the doctrine in California. It’s also a reminder to consider ways that it could be invoked, potentially early in a case. Many courts find that the filed-rate doctrine is an affirmative defense or merits issue, making it difficult to raise in a motion to dismiss. But other courts have viewed it as a standing or jurisdictional issue because it results in no legally cognizable injury that the court could redress. Driving Toward Class Certification Denials in Auto Insurance Total-Loss Suits Drummond v. Progressive, No. 24-1267 (3rd Cir. July 7, 2025). Freeman v. Progressive, No. 24-1684 (4th Cir. Aug. 25, 2025). Schroeder v. Progressive, No. 24-1559 (7th Cir. July 24, 2025). Ambrosio v. Progressive, No. 24-2708 (9th Cir. Sept. 12, 2025). A quartet of circuit courts has steered the law toward consensus in denying class certification for claims that auto insurers incorrectly calculated the actual cash value of vehicles using projected sold adjustments, or PSAs. PSAs take the advertised price of unsold comparable vehicles and adjust that list price downward to reflect consumer behavior in negotiating the price. The Third, Fourth, Seventh, and Ninth Circuits agreed that these lawsuits would require individually evaluating the pre-accident value of each car to determine whether it was greater than the insurer’s calculation, resulting in the predominance of individualized inquiries. The fact that the use of PSAs allegedly always resulted in a downward adjustment from an unchallenged calculation was insufficient to establish classwide proof of injury. And classwide proof of injury, unlike post-liability damages, must be established at the class certification stage. n Judicial notice rules could also provide some leeway for presenting the issue at the pleading stage. The doctrine may also provide a reason not to certify a nationwide class action involving rates that were submitted to state regulators because the variance in the doctrine creates issues that must be individually assessed for each state. n Cost of Insurance Goes to the Dogs Sage v. Westchester Fire Insurance Company, No. 2:25-cv-01644 (W.D. Wash.). Tenney v. Westchester Fire Insurance Company, No. 8:25-cv-02186 (C.D. Cal.). A pair of putative class actions are pending in Washington and California, alleging that insurers that issued pet insurance breached their policies when they increased premiums. The policies provided that “[m] onthly premiums may change for all policyholders to reflect changes in the costs of veterinary medicine.” Reminiscent of cases challenging increases to the cost of insurance in human life insurance policies, the plaintiffs assert that this provision limits the insurers to increasing premiums based only on increased costs in veterinary care, considering no other unauthorized factors. These two cases are in their early stages, while other similar cases have settled. We are watching this litigation trend for holdings that may apply beyond the doghouse. n Eleventh Circuit Predicts Florida Would Apply the NoticePrejudice Rule to Claim Notice Provisions L. Squared Industries v. Nautilus Insurance Co., No. 23-13031 (11th Cir. Oct. 15, 2025). An insured failed to notify its insurer within seven days of identifying a pollution condition, as required by its claims-made policy. The Eleventh Circuit was tasked with determining how Florida courts would rule when an insured gave notice of its potential claim within the claims-made policy period but not within the time limit of a notice provision. Because Florida courts had not addressed that question, the Eleventh Circuit applied the majority view, which is that there is a rebuttable presumption of prejudice to the insurer barring coverage. The insured had not submitted evidence to rebut that presumption, so the court upheld a grant of summary judgment in favor of the insurer. n Insurance Rate Reflections 5 4 Coverage Corner

7 Gillian Clow Tania Kazi (Editor-in-Chief) Jyoti Kottamasu Sam Burdick Peter Cornick Emma Braden Andrew Roberts Matt Byers Blake Simon Arianna Clark Parsa Tafazoli Yazdi Tejas Patel Melissa Quintana Calvin Hart Jonathan Kim Jason Sigalos Laura Simmons Contributors 6 Spotlight on Structured Finance Alston & Bird’s structured finance team guides insurance companies through all phases of a financing transaction, advising on commercially feasible structures that meet the requirements and regulations of the insurance industry. The team keeps pace with financial structures that evolve with technology, regulation, and industry trends. Since 2020, there has been a significant shift in insurers’ investment and exposure to residential real estate. For example, life insurance companies owned $92.6 billion in residential mortgage loans as of Q1 2024, compared with only $40 billion in 2020. Higher interest rates, steady returns, low risk-based capital (RBC) charges, and favorable deal structuring drive that trend. Click here to read more about why insurance companies are turning to residential mortgage loans. n Tara Castillo Partner, Structured Finance Katrina Llanes Partner, Structured Finance

9 8 Other Professionals Assisting the Insurance Industry Insurance Partners and Counsel Elizabeth Clark Partner, Securities Litigation Jennifer Everett Partner, Technology & Privacy Robert Long Partner, Securities Litigation Emily Costin Partner, Compensation, Benefits & ERISA Litigation Scott Harty Partner, Global Tax Services Kim Peretti Partner, Litigation & Trial Practice Kristen Truver Partner, Finance Practice Group Alex Lorenzo Team Lead Mona Bhalla Partner Tom Evans Partner Tania Kazi Partner Bo Phillips Partner David Carpenter Partner Bill Higgins Senior Counsel Rachel Lowe Partner Reade Seligmann Partner Elizabeth Buckel Partner Patrick Gennardo Partner Joanna Schorr Partner Cari Dawson Partner Dan Diffley Partner Kathy Huang Los Angeles Adam Kaiser New York Sam Park Partner Tejas Patel Counsel Kristin Shepard Counsel Mike Valerio Counsel Tiffany Powers Team Lead Andy Tuck Team Lead Brian Ellsworth Partner, Intellectual Property - Patents Zack Higbee Partner, Intellectual Property - Patents Katrina Llanes Partner, Structured Finance Tara Castillo Partner, Structured Finance Allison Ryan Partner, Real Estate

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