A group of companies has settled civil and regulatory issues relating to alleged bid rigging in the sale of insurance. A District Court has approved a settlement whereby Zurich Financial Services, Zurich American Insurance Company, Steadfast Insurance Company, Fidelity and Deposit of Maryland, Empire Fire and Marine Insurance Company, American Guarantee and Liability Insurance Company, Empire Indemnity Insurance Company and Assurance Company of America have settled all claims in a pending MDL action, and also settled with numerous state attorneys general and insurance departments. In re: Insurance Brokerage Antitrust Litigation, Case No. 04-5184/MDL No. 1663 (USDC D.N.J. Feb. 16, 2007). Details of the settlement, which will cost the companies over $200 million, may be found in a Memorandum In Support of a motion seeking approval of the settlement.
Tenth Circuit adopts arbitral immunity doctrine
In an appeal from an award in an NASD-sponsored arbitration, the Tenth Circuit has joined virtually all other Circuits in recognizing that arbitrators, arbitral forums and arbitral sponsors are immune from liability for actions taken in connection with administering arbitration. Pfannenstiel v. Merrill Lynch, Pierce, Fenner & Smith, Case No. 04-1274 (10th Cir. Feb. 20, 2007).
Court orders production of documents regarding reinsurance of similar risks
In an action seeking reinsurance for trucking risks, in which the reinsurer alleged that the reinsurance had been placed in breach of various binding guidelines and agreements, a magistrate judge granted, in part, a motion to compel the reinsurer to produce documents relating to its underwriting process and declination of other trucking risks. The Court believed that the documents were discoverable to rebut the reinsurer's position. Scottsdale Insurance v. American Re-Insurance Co., 8:06-cv-00016 (D. Neb., Feb. 2, 2007)
Cat risk legislative update
There are three recent items of interest in pending legislation regarding cat risks:
- a Bill has been introducted in the United States Senate (S. 292) to establish a bi-partisan Commission on Catastrophic Disaster Risk and Insurance, to assess the condition of the property and casualty insurance and reinsurance markets in the aftermath of the recent hurricanes, and the ongoing exposure of the United States to various cat risks, and recommend any necessary legislative and regulatory changes to improve the financial health and competitiveness of such markets and assure consumers of the availability of adequate insurance coverage at competitive prices;
- a Bill has been introduced in the Missouri Senate (SB 518 – bill text and bill summary) to establish the Missouri Catastrophe Fund to help protect property and casualty insurers against insolvencies caused by certain natural disasters.
- two Bills have been introduced in the New York Senate to establish a state cat fund (S. 1883 and S. 2520).
Hannover Re issues $106 million cat securitization
Hannover Re has issued a $160 million securitization of catastrophe risks. Hannover described the issue as the completion of its “K3” transaction, being composed of a variety of non-proportional reinsurance of natural perils (hurricanes and earthquakes in the United States, windstorms in Europe and earthquakes in Japan) and worldwide aviation business.