The HONORABLE CAROL E. JACKSON, United States District Judge 1

for the Eastern District of Missouri.

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No. 95-3090EM

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Lexington Insurance Company, *

*

Plaintiff - Appellee, *

* Appeal from the United States

v. * District Court for the

* Eastern District of Missouri.

St. Louis University, *

*

Defendant - Appellant. *

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 Submitted: February 15, 1996

 Filed: July 8, 1996

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Before BEAM, LOKEN, and MORRIS SHEPPARD ARNOLD, Circuit Judges.

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LOKEN, Circuit Judge.

Lexington Insurance Company ("Lexington"), a London-based insurer,

issued a liability policy to St. Louis University for claims made during

the period July 1, 1990, through July 1, 1991. On May 20, 1991, Shelly

McCormick sued the University for medical malpractice allegedly committed

in 1979. The University mistakenly listed McCormick's claim as a 1979

rather than a 1991 claim on "loss run" reports submitted to Lexington

before the policy expired. Therefore, the district court granted summary 1

judgment declaring that Lexington need not indemnify the University for

McCormick's claim because it was not made and reported during the policy

period. The University appeals, seeking to distinguish
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controlling Missouri and Eighth Circuit cases construing claims made

policies. We affirm.

1. The issues here turn on the crucial difference between

"occurrence" and "claims made" liability insurance policies. Under an

occurrence policy, there is coverage for negligent conduct of the insured

that occurs during the policy period. A claims made policy, on the other

hand, provides coverage if the third party's claim is made against the

insured, and brought to the insurer's attention, during the term of the

policy. See Esmailzadeh v. Johnson & Speakman, 869 F.2d 422, 425 (8th Cir.

1989). Both types of policies require the insured to promptly notify the

insurer of possible covered losses. With a claims made policy, however,

that notice is not simply part of the insured's duty to cooperate. It

defines the limits of the insurer's obligation -- if there is no timely

notice, there is no coverage. A claims made policy "allows the insurer to

more accurately fix its reserves for future liabilities and compute

premiums with greater certainty." FDIC v. St. Paul Fire & Marine Ins. Co.,

993 F.2d 155, 158 (8th Cir. 1993). 

Like many States, Missouri has adopted regulations prohibiting unfair

insurance claims settlement practices. One of those regulations, adapted

from prior court decisions, provides:

No insurer shall deny any claim based upon the insured's

failure to submit a written notice of loss within a specified

time following any loss, unless this failure operates to

prejudice the rights of the insurer.

20 Mo. Code Regs. § 100-1.020(4). In Esmailzadeh, we held that a

comparable Minnesota regulation did not apply to claims made policies.

Unless there is timely notice, the claim is not covered, we explained, so

excusing tardy notice "would alter a basic term of the insurance contract."

869 F.2d at 424.
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The Missouri Courts of Appeals have followed Esmailzadeh, holding

that an insurer need not prove prejudice to avoid coverage under a claims

made policy if the claim was not reported until after the policy expired.

See Insurance Placements, Inc. v. Utica Mut. Ins. Co., 917 S.W.2d 592, 597

(Mo. App. 1996); Continental Casualty Co. v. Maxwell, 799 S.W.2d 882, 886-

87 (Mo. App. 1990). As the district court recognized, this principle is

governing law in a diversity case. The question then is whether the

University can avoid its grasp.

2. Lexington's claims made policy insured the University for medical

malpractice losses that exceeded $2 million. The policy's Hospital

Professional Liability endorsement covered: 

all sums which the Named Insured shall become legally obligated

to pay as damages because of Bodily Injury caused by a Medical

Incident which results in a claim or claims being first made,

in writing, against the Insured during the period of this

Policy.

(Emphasis added.) Noting that the insuring clauses in the policies at

issue in Esmailzadeh and other cases covered "claims first made and

reported," 869 F.2d at 423, the University argues that the absence of "and

reported" language in Lexington's insuring clause means that the prejudice

rule of the above-quoted regulation should apply. The district court

rejected that contention. Looking at the policy as a whole, the court held

that it should be construed like other claims made policies. We agree.

The Lexington policy begins, "THIS IS A CLAIMS MADE POLICY." The

policy's Reporting and Claims Handling Endorsement provides that the

University "shall give" Lexington notice of each claim "as soon as

practicable," and in any event, "during the period of this Policy." The

Reporting and Claims Handling Endorsement expressly provides that

compliance with these notice provisions is a "condition of the Insured's

right to indemnity under this Policy." 
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The Hospital Professional Liability Endorsement likewise includes the duty

to notify in its "Conditions" section. 

This policy language making notice a condition of coverage is

virtually identical to the policy notice requirement in Continental

Casualty, 799 S.W.2d at 884. Moreover, the relevant Missouri cases

emphasize that timely reporting of claims to the insurer under a claims

made policy is an essential part of the contract. See Insurance

Placements, 917 S.W.2d at 597; Continental Casualty, 799 S.W.2d at 886.

The University bases its argument for a prejudice requirement on Tuterri's,

Inc. v. Hartford Steam Boiler Inspection & Ins. Co., 894 S.W.2d 266, 269

(Mo. App. 1995), a case that did not involve a claims made policy. We

agree with the district court that Continental Casualty is controlling.

Therefore, Lexington need not prove prejudice to deny coverage if the

University failed to report the McCormick claim within the policy term.

3. Turning to that fact issue, the University argues that it did in

fact provide Lexington adequate notice of the McCormick claim before the

policy expired. Lexington agreed to accept the University's "loss run"

computer printout as a notice of claims first made. This document

recorded, tracked, and provided information regarding all claims asserted

over a number of years. The McCormick claim was mistakenly listed on the

June 28, 1991, loss run as a 1979 claim. Pointing to policy language

excusing harmless "inadvertent error" in reporting claim information, the

University contends that it simply made a good faith reporting mistake that

must be forgiven absent prejudice to Lexington. 

The policy language cited by the University relates to errors in

reporting claim information after initial notice of the claim has been

given. Here, on the other hand, the issue is lack of an initial notice.

The June 1991 loss run was a fifteen-page document reporting over 500

incidents. The University reported the McCormick claim in the first

section of the loss run, which covered
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years prior to 1987, when the University was solely self-insured. The

second section covered years after 1987, when the University first obtained

excess liability coverage. That section listed claims by the year in which

they were first asserted. We agree with the district court that listing

the McCormick claim in the 1979 portion of the loss run reports did not

give Lexington notice that a new claim had been made during the 1990-1991

policy period. Because the University presented no evidence that it

reported the McCormick claim to Lexington in any other fashion prior to the

end of the policy period, there was no coverage as a matter of law.

The judgment of the district court is affirmed.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.