Most significant insureds that provide services purchase both directors and officers liability insurance (“D&O”) and errors and omissions insurance (“E&O”). When the services provided are that of a stock exchange, claims by investors against the exchange for wrongful acts concerning the listing of a security may implicate both types of coverage. In a recent case, a court construed the interplay between these coverages and the application of the professional services exclusion typically found in D&O policies.
In my last blog post, I looked in overview at the Insurance Act 2015 (the “Act“), which comes into force in England and Wales on 12 August 2016 and revolutionises insurance contract law. This post looks at the potential for disputes arising from the new provisions of the Act, and how insurers could look to manage the risks.
The Insurance Act 2015 (the “Act”), which comes into force on 12 August 2016, is the most significant reform of English insurance contract law for over 100 years. The provisions of the Act apply to all (non-consumer) contracts of insurance and reinsurance that are governed by English law regardless of the country in which the policy is underwritten. It also applies to any variations to existing insurance contracts made after 12 August 2016. The Act tries to help the level the commercial playing field in the English insurance market by addressing what is perceived to be a legal imbalance in favour of insurers. It also updates existing (and arguably outdated) rules which no longer reflects good market practice in the 21st century.
One of the most vexing issues facing parties in reinsurance arbitrations is whether the other side’s party-appointed arbitrator qualifies under the arbitrator criteria set forth in the arbitration clause of the reinsurance agreement. The issue is frustrating because sometimes the arbitrator criteria is not as clear as it should be, which leaves room for creative appointments. It is also frustrating because when a counter-party appoints an arbitrator that arguably does not qualify, there is very little that the other party can do about it.
Collateral disputes over the qualifications of the arbitration panel may seem to be a great waste of time and money, but given the existing party-appointed system of advocate-arbitrators that has yet to be replaced by a neutral panel system, the make-up of an arbitration panel is seen as critical to a successful outcome. For this reason, parties are sometimes hesitant to go forward with panel selection when the other side appoints an arbitrator that may not qualify under the criteria established by the arbitration clause.
If a party believes that the opposing party’s arbitrator is not qualified, the party may object to the appointment and request the other party to replace its arbitrator with a qualified candidate. If the other party refuses, the objecting party must decide whether to challenge the appointment or go forward with umpire selection under a reservation of rights.
In a recent case, a Massachusetts federal court had an opportunity to address an objector’s challenge to a party-appointed arbitrator as part of a pre-award petition to remove the arbitrator and enforce the arbitration agreement. That challenge failed.
Like many automobile no-fault systems, New York’s no-fault law provides that in an auto accident, each injured person or their medical provider is entitled to direct reimbursement for medical expenses regardless of fault from each person’s own automobile no-fault insurer. So what happens if the medical providers bill the injured person’s health insurer instead of the no-fault insurer and the health insurer pays the bills? The New York Court of Appeals just answered that question.
The Common Interest Doctrine is used often in insurance and reinsurance-related disputes. As policyholder and claimant lawyers continue to aggressively pursue communications between insurers and reinsurers about their claims, those seeking to preclude disclosure often turn to the common interest doctrine to assert this as an exception to waiver of the attorney-client privilege. Many courts have extended the common interest doctrine to include any common legal advice and strategy and not just legal advice and strategy on current or anticipated litigation. New York has just chosen not to do so.
Under many states’ insurance laws, the formation of companies or the issuance of policies require filing and often approval by the state insurance regulator. Additionally, every insurance company licensed in a state will come under a periodic examination during which information will be requested and collected by the insurance regulator and will result in an examination report produced on the findings of that examination about that insurance company. In litigation involving the creation of an insurance or reinsurance company, are examination reports and other communications with the insurance regulator subject to disclosure under the applicable discovery rules in federal court?
Litigators know that in federal court initial disclosures are required. Under FRCP 26(a)(1)(A)(iv), parties must provide to the other side for inspection and copying “any insurance agreement under which an insurance business may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for payments made to satisfy the judgment.” The question is, does this section apply to reinsurance agreements?
Long-tail claims from asbestos and other toxic exposures have plagued policyholders and their insurers for decades. Myriad issues arise when trying to determine when injuries are incurred, how policies are triggered, how liability should be allocated among multiple policies and when excess policies are required to cover the losses. None of this is easy and there is no uniformity among the various courts that have dealt with these issues.
That brings us to the latest pronouncement from the New York Court of Appeals, which was asked by the Delaware Supreme Court to answer certified questions under New York law about whether “all sums” or “pro rata” allocation applies in an excess insurance situation that contain non-cumulation and prior insurance provisions and whether horizontal or vertical allocation is required before the excess policies attach in an asbestos situation.
The reinsurance industry has always had reinsurance auditors that performed various tasks for cedents and reinsurers to monitor programs and determine whether the counter-parties were complying with the contracts. In the past few years, a newish type of auditor has appeared (at least newish to me). This type of auditor looks at reinsurance programs to determine if the cedent has overpaid reinsurance premiums and has been underpaid for reinsurance recoveries. A recent case in Pennsylvania highlights this type of audit work. Continue Reading