The year 2015 was filled with rulings impacting all facets ofthe insurance industry.

For example, the U.S. Supreme Court upheld a key provision ofObamacare in a decision embraced by health insurers.

On the other end of the spectrum, the Supreme Court stunnedhomeowner insurers with a Fair Housing Act decision that mayrequire them to fundamentally change how they determinepricing.

There were also notable rulings concerning assignment rights,defense costs of independent counsel, and cyber insurancecoverage.

Here are five cases and their impact on the insuranceindustry:

The U.S. Supreme Court in Washington, D.C. (Photo:Thinkstock)

1. Texas Dept. of Housing and Community Affairs v.Inclusive Communities Project, Inc.

In Texas Dept. of Housing and Community Affairs v. InclusiveCommunities Project, Inc., 135 S. Ct. 2507 (2015), the U.S.Supreme Court surprised many by holding that disparate impactclaims are cognizable under the Fair Housing Act (FHA). The FHA isa 1968 law that prohibits racial discrimination in the sale, rentaland financing of homes. Although the FHA specifically outlawspractices with discriminatory intent, most federal appellate courtshave also applied the FHA to practices with discriminatoryoutcomes.

Accordingly, a practice can be illegal if it disproportionatelyaffects minorities, regardless of the intent, under a disparateimpact theory. Inclusive Communities Project, Inc., a non-profitgroup advocating racial integration, alleged that Texas violatedthe FHA by disproportionately awarding housing tax credits todevelopers of properties in poor areas with large minoritypopulations, rather than predominantly white suburbanneighborhoods, thereby perpetuating segregated housingpatterns.

In examining the history and enactment of the FHA, as well asother anti-discrimination statutes such as Title VII of the CivilRights Act of 1964, the Supreme Court, in a 5-4 decision, concludedthat Congress intended to permit housing discrimination claims evenwhere there was no evidence of discriminatory intent. Therefore, aplaintiff can proceed with a discrimination claim based on theeffects of a defendant's policies even if the defendant lackedintent to discriminate. The decision was a surprise, given that theSupreme Court, under Chief Justice John Roberts, has scaled backother civil rights laws, such as the Voting Rights Act.

This decision raises concerns for homeowner insurers that maynow be liable for practices that are not intended to discriminate,but still have a disproportionately adverse effect on minoritygroups. In addition, applying the FHA to the homeowners' insurancemarketplace could undermine existing state regulation. Further,federal agencies, which have garnered large settlements fromlenders in discrimination challenges brought under a disparateimpact theory, may now have an incentive to target insurers.

Related: Housing-discriminationlawsuits backed by U.S. Supreme Court

A crowd gathered outside the Supreme Court in Washington,D.C., on March 4, 2015, as the court heardarguments in King v.Burwell, which was a major test of President Barack Obama's healthoverhaul. (Photo: Pablo Martinez Monsivais/AP Photo)

2. King v. Burwell

The Obama administration declared a major victory when theSupreme Court ruled that millions of Americans were entitled tokeep insurance tax subsidies in King v. Burwell, 135 S.Ct. 2480 (2015). The issue in King was whether low andmiddle class Americans who purchased health insurance through thefederally operated Healthcare.gov marketplace were entitled tosubsidies, given that the Affordable Care Act specified tax creditsbe provided only for marketplaces “established by the state.”

Writing for a 6-3 majority, Chief Justice Roberts noted that,despite the statute's ambiguous language, it was implausible forCongress to have intended to exclude residents of states that hadnot established exchanges. The decision was a relief to healthinsurers that were bracing for a monumental decline in customersand a sharp increase in premiums.

Related: King v. Burwell ruling good news forcarriers

The California Supreme Court headquarters in San Francisco.(Photo: Wikimedia Commons)

3. Fluor Corp. v. Super. Ct.

In a victory for corporate policyholders, the California SupremeCourt in Fluor Corp. v. Super. Ct., 61 Cal. 4th 1175(2015), held that an anti-assignment clause in a liability policydoes not bar coverage where the assignment occurred post-loss. Thisdecision overturned the Court's prior decision, Henkel Corp. v.Hartford Accident & Indemnity Co., 29 Cal. 4th 934 (2003),which held that corporate successors were not entitled to recoveryunder an insurance policy assigned without the insurer's consent,even if the assignment was post-loss and therefore imposed noadditional obligations on insurers.

The Court found that Henkel neglected to considerCalifornia Insurance Code § 520, a provision that was intended toavoid unjust enforcement of consent-to-assignment clauses.Fluor is a victory for corporate policyholders because itprotects their ability to assign coverage rights to corporatesuccessors. Further, California is now in line with a majority ofjurisdictions that prohibit insurers from asserting anti-assignmentclauses to avoid coverage for pre-assignment losses.

Related: What the Fluor Corp. ruling means forinsurers

The U.S. District Court for Utah in Salt Lake City. (Photo:Wikimedia Commons)

4. Hartford Casualty Insurance Co. v. J.R. MarketingLLC

In Hartford Casualty Insurance Co. v. J.R. MarketingLLC, 61 Cal. 4th 998 (2015), the California Supreme Court wasasked to weigh in on an insurer's ability to seek reimbursement ofdefense costs directly from a policyholder's independent counsel.In this case, the Hartford had been directed by a court enforcementorder to pay the legal fees of its policyholder, J.R. MarketingLLC, under a reservation of rights, in a third-party action.

The Hartford argued it was entitled to reimbursement of fees andservices beyond the enforcement order to the extent that the costswere “abusive, excessive, unreasonable or unnecessary.” The trialcourt ruled in favor of Squire Sanders, the policyholder'sindependent counsel, that the Hartford could not pursue a claim forreimbursement directly against a non-insured. The Court of Appealaffirmed the trial court's decision.

On further appeal, the California Supreme Court reversed thedecision, holding that the Hartford could sue Squire Sandersdirectly. Although the Court noted that its findings were limitedto the unusual facts of the case, this case has raised discussionamong insurers about whether they can now successfully argue thatreimbursement actions can be asserted directly against independentcounsel. Such actions would likely be opposed vigorously by thedefense bar, which will argue that an independent counsel's duty tozealously advocate on behalf of its client, the policyholder, wouldbe negatively impacted if the costs associated with its legalstrategy could be contested by the insurer.

Related: Reservation of rights: Harsh consequences forgetting it wrong

Travelers was involved in a Cyber insurance case that didnot involve a data breach. (Photo: Ann Heisenfel/AP Photo)

5. Travelers Property Casualty Co. of America et al. v.Federal Recovery Services

In Travelers Property Casualty Co. of America et al. v.Federal Recovery Services, 2015 WL 2201797 (D. Utah May 11,2015), a Utah federal court issued one of the first rulingsconcerning coverage of a Cyber insurance policy. Travelers issued acyber policy to a data storage and processing company, FederalRecovery Services, which provided coverage for “errors andomissions wrongful acts.”

Federal Recovery subsequently entered into a service agreementwith fitness center operator Global Fitness Holdings, whichrequired Federal Recovery to process its member accounts andtransfer member fees to Global Fitness. Global Fitness laterentered into an asset purchase agreement with a different fitnesscompany under which it agreed to transfer all of its memberaccounts data to the purchaser. Federal Recovery refused totransfer some of this data unless Global Fitness satisfied certaindemands for compensation. Global Fitness sued Federal Recovery forbreach of contract, as well as other causes of action.

Pursuant to its Cyber policy, Travelers agreed to defend FederalRecovery under a reservation of rights, but then filed adeclaratory judgment action seeking a ruling that it did not haveto defend. The policy provided coverage to Federal Recovery for“errors and omissions wrongful acts,” which were defined as “anyerror, omission or negligent act.” The Utah federal court ruledthat Travelers did not have a duty to defend Federal Recovery.Although the insured's policy covered errors, omissions andnegligent acts, Global Fitness' claim that Federal Recoverywillfully withheld data was not covered.

Interestingly, Travelers, one of the few Cyberinsurance coverage decisions issued, did not involve one of themany data breaches that have resulted in the cyber insurance boom.This decision suggests that courts will decide at least some futureCyber insurance cases based on well-employed traditional coveragetheories. The year 2016 will undoubtedly bring much-needed legalguidance to the cyber insurance field, particularly in light of theU.S. Court of Appeals for the Third Circuit's recent ruling inFTC v. Wyndham Worldwide Corp., 799 F.3d 236 (3d Cir.2015), that the Federal Trade Commission has the authority toregulate cybersecurity as an unfair business practice.

While insurers have seen a multitude of decisions impacting allaspects of the marketplace in 2015, it is likely that 2016 willbring even more important decisions. In addition to new cyberliability decisions, insurers will likely see litigationchallenging the Affordable Care Act and employing disparate impactanalysis in 2016. In addition, insurers may see interestingdevelopments in class action jurisprudence, wage and hourlitigation, and regulatory actions and investigations.

Related: Conn.court says insurer doesn't have to pay in IBM data breachcase