Are Insurers' Panel Counsel Rates Reasonable?

It is a settled principle of insurance law that a liability insurer's duty to defend is broader than its duty to indemnify. In most jurisdictions, if any portion of a complaint against a policyholder is even potentially covered, the insurer must defend the entire action.

Moreover, it is also well-settled that if an insurer agrees to defend but reserves its right to deny coverage, this creates a conflict of interest between itself and its policyholder that entitles the policyholder to select independent defense counsel funded by the insurer. For policyholders, the essence of this conflict is their concern that an insurer exerts control over and instills loyalty from counsel it selects (who receive large amounts of work from the insurer) and that such counsel has a strong financial incentive to defend the policyholder in a manner that relieves the insurer of any coverage obligations. For example, defense counsel can strip the policyholder of its coverage and provide