Archives: Reinsurance

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The Struggle to Maintain the Attorney-Client Privilege for In-House Insurance Counsel

When an in-house attorney at an insurance company is asked to analyze complex insurance coverage scenarios and their reinsurance implications by a senior business executive, is the written memorandum prepared by in-house counsel protected from disclosure by any applicable privilege or doctrine? That was the question before a federal magistrate judge in ruling on whether … Continue Reading

March 2017 Reinsurance Newsletter

This quarter’s Squire Patton Boggs Reinsurance Newsletter focuses on the certified question sent to the New York Court of Appeals by the Second Circuit on Bellefonte. It also features regulatory updates on the US-EU Covered Agreement as it affects reinsurance and on the new duty to pay insurance and reinsurance claims in the UK. Finally, … Continue Reading

The US/EU Covered Agreement — Why Is It Relevant to Disputes?

On January 13, 2017,  Federal Insurance Office (“FIO”) submitted to the US Congress a Covered Agreement negotiated with the EU  addressing:  (1) group supervision;  (2) reinsurance;  and (3) exchange of information between regulators.  Once fully implemented, the Covered Agreement eliminates EU collateral and local presence requirements for US insurers operating in the EU, and eliminates … Continue Reading

Important New Law in the UK Relating to Payment of Insurance Claims

At the moment, English law says that insurers and reinsurers are not under a positive duty to pay valid claims within a reasonable time.  If an insurer/reinsurer delays in paying a claim, or fails to pay at all, an insured/reinsured can only claim the sums due under the policy and interest.  An insured/reinsured cannot claim … Continue Reading

Exculpatory Clauses in Reinsurance Agreements

Exculpatory clauses appear in many contracts. They are often used to protect a contracting party from damages caused by its actions or the actions of others. For example, a hold harmless clause may protect one party from third-party suits caused by the alleged negligence of the other party. Exculpatory clauses, like hold harmless or indemnification clauses, … Continue Reading

The Assault on Bellefonte Accelerates

In a highly anticipated decision, the United States Court of Appeals for the Second Circuit has certified an important question of reinsurance law to the New York Court of Appeals. The appeal had amicus briefs from reinsurance intermediaries supporting the cedent’s argument that the so-called “Bellefonte” rule should not apply. We discussed this in an … Continue Reading

What a Difference a Word Makes

Lack of precision in reinsurance contract wording has been known to engender anomalous results. Often a single word or phrase can cause a court or arbitrator to construe an agreement in ways unintended. In reinsurance arbitrations, when the panel majority decides how a contract operates based on its construction of a word or phrase, the … Continue Reading

The Dangers of Selecting an Exclusive Arbitral Forum

Arbitration clauses in commercial contracts often specify an arbitral forum before which any dispute must be arbitrated. Insurance and reinsurance contracts containing arbitration clauses are no different. Specificity about the arbitral forum (or the arbitral rules or the appointing authority in case of an impasse) in an arbitration clause has resulted in much case law over the … Continue Reading

Contractual Privity and Reinsurance

In most jurisdictions a policyholder cannot bring a direct action against a reinsurer because of the lack of contractual privity. Yes, there are some quirky statutes and jurisdictions that allow a direct right of action under certain circumstances, but the general rule is that where there is no contractual relationship between the reinsurer and the … Continue Reading

7th Circuit Affirms Waiver of Removal Because of Reinsurance Agreement Service-of-Suit Clause

In December 2015, an Illinois federal court held that the language of a service-of-suit clause in a reinsurance contract was a voluntary removal waiver and sent a case removed to federal court back to state court. That case went up to the Seventh Circuit Court of Appeals for review. The Seventh Circuit has now affirmed.… Continue Reading

Squire Patton Boggs Reinsurance Newsletter September 2016

The September 2016 edition of the Squire Patton Boggs Reinsurance Newsletter is out! In this issue, we cover the 6th Circuit’s decision on ex parte communications that resulted in an arbitration award being vacated. We also cover a Massachusetts federal court’s rejection of a pre-award challenge to an arbitrator and an Arizona federal court’s granting … Continue Reading

Ex Parte Communications and Vacating an Arbitration Award

When a reinsurance arbitration is conducted under non-neutral rules or practices, when and how ex parte communications are allowed to take place between a party’s counsel and a party’s party-appointed arbitrator are important items to resolve at the organizational meeting. A typical, but not universal, formulation is to cut-off ex parte communications when the first pre-hearing … Continue Reading

The Impact of Reinsurance on Homeowners Insurance Rates

Most of our posts discuss disputes involving specific claims or specific insurance or reinsurance contracts. But sometimes disputes arise in the regulatory context. This post is about the cost of catastrophe reinsurance protection, which factors into homeowners insurance rates rates used to develop the premiums charged to policyholders. This is especially relevant in states where natural … Continue Reading

Looking for Actual and Substantial Prejudice When Notice of Claim Is Late

Late notice of claim in both direct insurance and reinsurance are important issues. There are both contract and public policy issues that arise when considering if late notice will allow an insurer or reinsurer to avoid its obligations. We have authored a number blog posts here and IRMI.com commentaries on late notice issues in insurance … Continue Reading

When a Reinsurance Contract Is an Insurance Contract

You know the old saying: if it walks like a duck and quacks like a duck it must be a duck! So when a contract is called a Facultative Reinsurance Agreement is it a reinsurance contract or an insurance contract? Recently a Missouri appellate court addressed this issue to determine an appeal of the denial … Continue Reading

Are Pre-Award Challenges to Arbitrator Qualifications Still Possible?

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. … Continue Reading

New York Keeps Common Interest Doctrine Litigation Related

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 … Continue Reading

Does an Insurance Examination Privilege Exist?

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 … Continue Reading

Is a Reinsurance Contract an Insurance Contract for Discovery Purposes?

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 … Continue Reading

Reinsurance Premiums, Overcharges and Intermediaries

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 … Continue Reading

Arbitration Means Arbitration Even If It Is About Arbitration

No one should doubt that the federal policy in favor of arbitration is broad and deep. It is evident in how difficult it is to vacate an arbitration award or avoid having to arbitrate a dispute where there is a broad arbitration provision. A recent case makes this even clearer.… Continue Reading

Reliance as an Element of Utmost Good Faith

The doctrine of utmost good faith or uberrimae fidei is well known in two segments of the insurance industry: Marine Insurance and Reinsurance. The doctrine derives from marine insurance, but was adopted relatively early on in the reinsurance context. It has been characterized in the reinsurance context as an information forcing doctrine and is traditionally applied … Continue Reading
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