Judge Approves $73M Sandy Hook Settlement; 4 Carriers Sharing Loss

The cost of a $73 million settlement that gunmaker Remington Arms agreed to pay to families of victims of the Sandy Hook massacre will fall on four insurers.

Ironshore, a Liberty Mutual subsidiary; James River Insurance Co., ACE (now Chubb), and North American Capacity Insurance Co. (Swiss Re Corporate Solutions America Insurance Corp). A federal bankruptcy court in Alabama approved the insurance payments Tuesday on behalf of Remington, which is in Chapter 11 bankruptcy.

At the time of the shooting, the four insurers had a total of five policies in effect on Remington Arms and its companies. The four insurers sharing in the settlement payout to the families of the shooting’s victims are According to the court, the total stated limits of these five policies is $76 million. However, James River previously paid $2.5 million on a different related claim, reducing the potentially available limits to $73.5 million.

According to court documents, the five liability insurance policies issued to one or more of the Remington companies covered the period from Dec. 1, 2012 to Dec. 1, 2013, which includes the time when the shooting at Sandy Hook Elementary took place.

• Ironshore issued a first-layer general liability policy providing limits of $1 million per-occurrence / $3 million aggregate, subject to a $1 million per-occurrence self-insured retention (SIR) and an additional $1 million per-occurrence / $1 million aggregate corridor retention.
• James River issued a second-layer excess policy providing limits of $10 million, per-occurrence and aggregate, subject to a $1 million per-occurrence SIR.
• Ironshore issued a third-layer excess policy providing limits of $25 million, per-occurrence and aggregate, subject to a $25,000 per-occurrence SIR.
• ACE P&C issued a fourth-layer excess policy providing limits of $25 million, per-occurrence and aggregate. The ACE P&C policy does not have an SIR.
• NAC issued a fifth-layer excess policy providing limits of $15 million, per-occurrence and aggregate. The North American policy does not have an SIR.

In addition, as part of the order, James River must reserve $500,000 for a separate suit brought by plaintiff Precious Seguin in the event the U.S. Court of Appeals for the Fifth Circuit affirms the judgment in her favor. If Seguin’s judgment is reversed, then James River will pay the $500,000 to the Sandy Hook families.Twenty students and six adults were killed on Dec. 14, 2012 in Newtown, Connecticut, by shooter Adam Lanza. Lanza used a Remington Bushmaster AR-15 rifle in the shooting. This settlement involves nine families of five adults and four children who were killed.

The settlement marks the first time a gunmaker has been held responsible for a mass shooting in the country. The plaintiffs’ lawyers took the unusual route of focusing not on Remington’s manufacturing of the gun used but on its marketing. While the federal Protection of Lawful Commerce in Arms Act grants firearms makers immunity from product liability, the plaintiffs argued that law did not apply. Instead, they focused on Remington’s “aggressive and violence-glorifying marketing” of its AR-15s as an unfair trade practice and a violation of Connecticut law. The legal strategy sought to uncover how Remington marketed the AR-15 to “young, violence-prone men.”

The families and their lawyers hope the settlement sends a message to insurers and banks as well as to gunmakers and marketers.

“These nine families have shared a single goal from the very beginning: to do whatever they could to help prevent the next Sandy Hook. It is hard to imagine an outcome that better accomplishes that goal,” said Josh Koskoff, lead counsel and partner at the Connecticut law firm Koskoff, Koskoff & Bieder, which represented the Sandy Hook families. “This victory should serve as a wake-up call not only to the gun industry, but also the insurance and banking companies that prop it up.

“For the gun industry, it’s time to stop recklessly marketing all guns to all people for all uses and instead ask how marketing can lower risk rather than court it. For the insurance and banking industries, it’s time to recognize the financial cost of underwriting companies that elevate profit by escalating risk. Our hope is that this victory will be the first boulder in the avalanche that forces that change.”

In addition to full insurance payouts, the plaintiffs insisted on another condition. The gunmaker must make public thousands of pages of internal documents and depositions that the families say will unveil Remington’s wrongdoing. They claim that the company, driven by parent private equity firm Cerberus, put profits over public safety and changed its previous approach to marketing firearms in favor of an “aggressive, multi-media campaign that pushed sales of AR-15s through product placement in first-person shooter video games and by touting the AR-15’s effectiveness as a killing machine.”

According to Koskoff, an earlier $33 million settlement proposal in July by Ironshore and James River was rejected.

About the photo: In this Jan. 28, 2013, file photo, firearms training unit Detective Barbara J. Mattson, of the Connecticut State Police, holds up a Bushmaster AR-15 rifle, the same make and model of gun used by Adam Lanza in the Sandy Hook School shooting, for a demonstration during a hearing of a legislative subcommittee reviewing gun laws, at the Legislative Office Building in Hartford, Conn. After the election of NRA-endorsed Donald Trump, gun-control advocates, including grassroots activists in Newtown, are pushing ahead with long-term strategies that bypass Washington such as efforts to fund campaigns for local and statewide pro-gun control candidates and passage of state gun control laws. (AP Photo/Jessica Hill, File)