In an effort to stabilize the National Flood Insurance Program (“NFIP”), Congress passed several bills that allowed the NFIP to access the private reinsurance market. First piloted in 2016, in 2017 the program resulted in a broker-placed $1.042 billion cover with 25 private reinsurance markets. The 2017 catastrophe excess-of-loss program provides coverage of 26% of losses between $4 billion and $8 billion for a premium of $150 million. Because of Hurricane Harvey, the NFIP’s catastrophe excess-of-loss program has been triggered and NFIP has put in a claim for the full $1.042 billion to the reinsurers. What happens next? Continue Reading
On 28 November 2017, the Bank of England (“BoE”) published its outlook for UK financial stability, a report on what it perceives as being the main risks to that stability. The headline grabber was the BoE’s view that the UK financial system was strong enough to withstand a disorderly Brexit. But buried away in the report was disconcerting news for all those who participate in the UK and European insurance markets.
A Protective Safeguards Endorsement (“PSE”), as defined by my friends at IRMI, is “[a] property insurance endorsement that makes it a condition of coverage that the protective safeguards cited in the endorsement (such as an automatic sprinkler system or night watch guard) be in operation at all times except when the insurer has been notified of the impairment in protection. Failure to maintain the protective safeguards in good working order or failure to notify the insurer of even a temporary impairment in protection suspends coverage until the protection is restored.” An example of the PSE is linked here. Essentially, as defined, it is a condition of coverage that if not met results in a loss of coverage.
In a recent case, a New York appellate court, had occasion to address the PSE after a fire in a multi-building condominium complex.
In an earlier blog post we discussed a Georgia case where settlement occurred without consent from the insured. In that case, the court held that when a policyholder settles without consent in the face of a consent to settle clause, the policyholder will not succeed in seeking a recovery for that settlement from the insurance company. In a recent New York intermediate appellate court decision, the court reached a similar outcome by affirming dismissal of the policyholder’s complaint under CPLR 3211(a)(1).
The title above is taken from a quote found in a recent Second Circuit non-precedential summary order in an insurance bad faith case. Bad faith is not easy to establish in New York. Strategic differences between an insurance company and its insured over whether, how and when to settle an underlying case generally do not rise to support bad faith allegations. In this recent case, the Second Circuit affirmed the dismissal of bad faith allegations.
Notice of claim or suit requirements in insurance policies are often viewed as a condition precedent to coverage. If the insured’s carrier is not given notice of the claim in a timely manner, the insurer may have no obligation to defend or indemnify the insured. But what happens if a claimant sues an insured defendant and the insured defendant defaults? Can the claimant force the insurer of the defaulted insured to pay the default judgment? The 5th Circuit Court of Appeals recently answered that question.
I recently came across a number of articles in the insurance trade press discussing the economic effect of the recent catastrophes on the reinsurance market. Some of the commentators wondered whether all of the property and related losses will cause reinsurance premiums to rise and end the very long soft reinsurance market. Others thought that the recent disasters are still not enough to turn the market, which may not bode well for some reinsurers. What does any of this have to do with reinsurance disputes?
The excess and surplus lines market is a market that functions with limited regulation. Most states have surplus lines laws that require surplus lines brokers to report their policies to state stamping offices to monitor the surplus lines business and collect taxes. The stamping offices are funded by stamping fees paid by the brokers based on a percentage of the policy premium. Surplus lines brokers are required by most state insurance laws to pay those fees to the stamping offices. But what if they don’t? Can the stamping office sue to collect the fees? The New York Court of Appeals just answered this question under New York law.
Confidentiality agreements in reinsurance arbitrations are ubiquitous, but often cause concern when a subsequent arbitration arises over the same or similar contracts with the same or similar parties. A question that has arisen with some frequency, but which has not been fully addressed in court, is whether the confidentiality agreement in the first arbitration precludes the parties or the panel in the second arbitration from obtaining or even discussing evidence from the first arbitration, which is or may be directly relevant to the issues in the second arbitration.
A typical directors and officers liability insurance policy provides coverage for officers and directors of a corporation for all loss that is not indemnified by the corporation resulting from a covered claim for a wrongful act as defined by the policy. Virtually all D&O policies also include an “Insured v. Insured Exclusion,” which precludes coverage for claims brought by or on behalf of or at the direction of any of the insureds (with some exceptions). One of the reasons for this exclusion is to prevent collusion between the company and an officer or director.
In a recent case before the Second Circuit Court of Appeals, the court had occasion to address the application of the Insured v. Insured Exclusion.