Court Examines Claims-made Policy, Retroactive Date Defense

By Don R. Sampen, published, Chicago Daily Law Bulletin, November 18, 2025

The 1st District Appellate Court recently held that coverage of a claim for the unlawful release of biometric data was barred as having occurred prior to the retroactive date under a claims-made policy.

The holding came despite the fact that the claim arguably was not known to the insured prior to the “deem to occur” notice provision of the policy.

The case is Thornley v. Axis Insurance Co., 2025 IL App (1st) 241480-U (Oct. 15). The class-action assignees of the insured were represented by Forde & O’Meara LLP of Chicago. Skarzynski Marick & Black LLP of Chicago represented the insurer, Axis.

The class-action plaintiffs were assignees of indemnity rights held by Wynndalco Enterprises LLC, an Illinois-based information technology services and consulting firm insured by Axis. Wynndalco had assembled a massive biometric database of individuals’ facial geometry based on photos taken from publicly available websites.

The Chicago Police Department wished to make use of the database in connection with its law enforcement activities and sought to purchase rights in the database through third-party purchasers. The purchase transactions took place in December 2019.

The plaintiffs brought their lawsuit in May 2020 on behalf of Illinois citizens whose facial scans were collected in the database. They alleged violations of the Illinois Biometric Information Privacy Act, 740 ILCS 14/1 et seq, including interference with the rights of privacy or publicity, false light, public disclosure of private facts, and so forth.

Wynndalco sought coverage under its Axis policy, but Axis refused to defend initially based on exclusions in the policy. The company then undertook its own defense and reached a settlement with the plaintiffs. The settlement included an assignment of its rights under the policy to the plaintiffs.

They subsequently sued Axis arguing that Wynndalco had committed “wrongful acts” or “enterprise security events” that triggered coverage. Axis defended relying on the policy exclusions. It also argued the sales transactions, which occurred in December 2019, took place before the retroactive date of the policy, which coincided with the policy’s effective date of Feb. 20, 2020.

Following cross-motions for summary judgment, the trial court entered judgment for Axis, and the plaintiffs appealed.

Analysis

In an opinion by Justice LeRoy K. Martin Jr., the 1st District affirmed on the basis of the retroactive date. He observed that a retroactive date in a claims-made policy limits coverage involving “wrongful acts” to those occurring on or after that date.

Such a limitation is typical in a claims-made policy, which insures against the risk of a claim being made against the insured during the policy period. This differs from an occurrence policy that insures against insurable acts occurring during the policy period regardless of when a legal claim for that act is made.

The plaintiffs argued, however, that, even though the sale took place prior to the retroactive date, a provision in the policy’s claims-reporting section stated that “a Wrongful Act will be deemed to occur when such Wrongful Act becomes known to a Control Group Insured.” According to the plaintiffs, the “deemed to occur” language made their lawsuit timely because their lawsuit was filed after the retroactive date.

Martin rejected the argument, finding that the “deemed to occur” provision was in the policy’s claims-reporting section and did not apply to the claims-coverage section, which incorporated the retroactive date. Adopting the argument would require a rewriting of the policy, which Martin said the court was not prepared to do.

He further wrote the policy was not susceptible to more than one reasonable interpretation, and that the plain language of the claims-made coverage section required that wrongful acts take place after the retroactive date.

The court therefore affirmed in favor of Axis.

Key Point

A claims-made policy’s retroactive date requirement in the coverage section of the policy will be given effect despite any arguable inconsistency with a wrongful act “deemed to occur” provision in the claims-reporting section.