An accusation by the Archdiocese of New York that Chubb waged a "shadow campaign" against the church while also defending a slew of sex abuse suits against the church has the potential to disrupt trust in the insurance market if the claims are substantiated, according to policyholder experts.

The archdiocese said Saturday that newly discovered evidence revealed that Chubb's alleged misconduct goes beyond the existing bad faith and general business law, or GBL, counterclaims it brought against the insurer in a New York state court.

The church is facing over 1,700 sexual abuse lawsuits and has clashed with Chubb in court over defense coverage. Chubb initiated the dispute in June 2023, prompting the archdiocese to file counterclaims a year later.

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I do think, if this is substantiated, Chubb could take a significant PR hit and policyholders may think twice about doing business with Chubb," said Cameron R. Argetsinger, a shareholder at Anderson Kill PC. "It's very important that policyholders be able to trust insurance companies because they are asking the insurance companies to defend them and indemnify them in times of crisis."

If a carrier provides legal defense to a policyholder, there should be no public "daylight" between the insurance company and the policyholder on the issue of liability, he said. While Argetsinger remains hopeful that no other insurers are conducting themselves in a similar manner to what the archdiocese is accusing Chubb of, policyholders should heed the allegations in this finding.

"This is a reminder that you always need to look after your own best interest as a policyholder," he said." When an insurance company is defending you under a reservation of rights to deny coverage later, that can give rise to incentives for the insurance company to do things that aren't in your favor, like steering the defense toward an outcome that isn't covered by insurance."

Due to the gravity of these allegations, the archdiocese's request that the court allow it to pursue punitive damages appears appropriate, he said.

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