Failure to Allocate Between Covered and Non-covered Damages Bars Indemnity

Insureds often face lawsuits where the claimant is seeking a broad array damages some of which may be covered by insurance and some of which are not covered by insurance.  Because the duty to defend is very broad, insurance companies will typically defend under a reservation of rights concerning the allocation between covered and non-covered damages.  In a recent case, the Eleventh Circuit examined the duties between the policyholder and the insurance company concerning liability for an unallocated jury verdict.

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Federal Risk Retention Act Preempts State Anti-arbitration Law

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During an earlier insurance availability crisis, the federal government enacted the Liability Risk Retention Act (“LRRA”).  Under the LRRA, a risk retention group (“RRG”) can be formed in one state and can do an insurance business in other states.  As discussed in a recent blog post, some states have passed anti-arbitration laws that preclude insurance policies in those states from containing arbitration provisions.  What happens when an out-of-state RRG demands arbitration of a coverage dispute against an insured in a state with anti-arbitration laws?

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Privacy Exclusion Precludes Coverage for Claims of Breach of Driver’s Privacy Protection Act

As data privacy statutes proliferate, insurance coverage disputes are rising concerning whether liability policies cover the defense and indemnification of violations of data privacy statutes.  Many of these consumer data privacy statutes predate the mass electronic collection and storage of personally identifiable information.  The analysis is similar about whether there is coverage against lawsuits arising out of older consumer privacy statutes or newer data privacy statutes.  In a recent case, the coverage dispute arose over a lawsuit brought under the Driver’s Privacy Protection Act of 1994 (“DPPA”).

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Reverse Preemption Is Alive and Well in Washington State

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Most reinsurance contracts have binding arbitration provisions.  The Federal Arbitration Act (FAA) sets out a national policy in favor of arbitration.  Yet, there are states that expressly preclude arbitration provisions in insurance contracts.  Does that apply to reinsurance contracts?

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Arbitrators to Decide If Reinsurance Rebilling After Final Arbitration Award Is Precluded

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What happens when, after a reinsurance arbitration over how the ceding company billed the reinsurer is resolved in the reinsurer’s favor with a final award confirmed by the court, the ceding company rebills the reinsurer for the same losses (but differently than the way it did during the prior arbitration)?  If the reinsurer again denies the billing, is the dispute subject to arbitration or is it precluded by the court’s judgment confirming the prior arbitration award?  That is the issue addressed by a Massachusetts federal court.

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Breach of Fiduciary Duty and Negligent Misrepresentation Is Not Property Damage

To obtain coverage under a property insurance policy there has to be property damage caused by an occurrence during the policy period.  Seems simple, but as we have seen, sometimes the round peg just does not fit in the square hole.  In a recent case, the Ninth Circuit addressed whether allegations of breach of fiduciary duty and negligent misrepresentation were property damage under an aviation policy.

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Facultative Certificate’s Stated Dollar Amount Only Caps Indemnity or Expenses When No Losses, But Does Not Cap Expenses When There Are Losses

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This week, the latest shoe dropped on the Bellefonte saga in New York federal court.  Following the New York Court of Appeals’ decision in Global Reinsurance Corp. of America v. Century Indemnity Co., 30 N.Y.3d 508 (2017), which disposed of any notion that a rule or strong presumption existed in interpreting the meaning of the stated limit in a facultative certificate, the federal district court, after 5 major opinions in the case, finally held an evidentiary hearing to resolve this long-standing declaratory judgment action.

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Who Decides Whether a Reinsurer Is a Run-off Reinsurer?

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In the past 10 years or so, several ceding companies began adding run-off reinsurer clauses to their reinsurance contracts to mitigate disputes that might arise with reinsurers no longer actively in business.  In a recent case, a Georgia federal court had to address whether it or an arbitration panel should determine whether the reinsurer was, in fact, a run-off reinsurer.

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March 2020 Reinsurance Newsletter

The Squire Patton Boggs Reinsurance Newsletter has been published.  The March 2020 Newsletter includes a discussion of a Third Circuit consolidation issue, reinsurance cases resulting from the recent hurricanes in Puerto Rico, an intervention case in the life reinsurance world, and, of course, our annual A Brief Review of Reinsurance Trends section covering the important cases from 2019.  Those include cases following on from the Global decision and the demise of Bellefonte and cases involving the discovery of reinsurance information.  You can access the March 2020 Reinsurance Newsletter here.

No Duty to Defend If No Fortuity and No Occurrence

So after just blogging about how tough it is to avoid the duty to defend, the Seventh Circuit issues an opinion concluding that where the underlying allegations lack fortuity and there is no occurrence, there is no obligation for the insurance company to defend.

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