The Connecticut Insurance Department has published notice of its intention to amend its current regulations concerning credit for reinsurance to delete the provision that relates to the disposition of assets of a single beneficiary trust on the insolvency of the reinsurer/grantor. Comments will be received prior through September 22, 2006.
New Jersey court rejects creative malpractice claim against reinsurance broker
In litigation over asbestos-related coverage that has been onging for 20 years, a New Jersey trial court has rejected claims for reinsurance broker malpractice or breach of contract, independent of whether the broker in fact procured coverage, when an insurer was able to raise colorable defenses to coverage such that summary judgment on the coverage issue was not possible. The Court found that such a cause of action would “stretch the limits of malpractice claims beyond any reasonable boundry by giving rise to myriad ill-defined and amorphous issues as to the contours of such a cause of action which would result in insurance claim litigation being more never ending than it already is.” The Court required that the claimant prove that coverage had not been obtained in order to establish liability. Owens Insurance, Ltd. v. Reiss Holdings, Ltd., Docket No. L-9575-02, in the Superior Court of New Jersey, Law Division, Middlesex County (June 14, 2006). In earlier proceedings, the reinsured had taken the position that even if coverage had been obtained, if the coverage did not encompass all of the risks that the broker had been instructed to reinsure, the reinsured would seek to hold the broker liable for any unreinsured losses. This might be a particularly interesting claim here, since the broker, and its affiliates, had set up a captive insurance company that was the reinsured under the treaties at issue, and hence were driving forces in the structuring of the risks and the various layers of insurance and reinsurance. It is not clear whether the reinsured will pursue that theory.
Names lose exchange rate issue with Lloyd's
In another of a series of cases involving Lloyd's enforcing UK judgments against Names for Equitas reinsurance premium, after losing on a summary judgment motion that enforced the UK judgment, a Name moved to set aside the judgment based upon an exchange rate provision. Finding the District Court did not err by applying the Utah Uniform Foreign-Money Claims Act, the Tenth Circuit affirmed the denial of the motion. Society of Lloyd's v. Bennett, Case No. 05-4069 (10th Cir. June 2, 2006). This appears to be one of those cases in which a party simply will not give up. Having lost in the English Courts and in the US District Court, while an appeal was pending to the Tenth Circuit, the Names sought to vacate or modify the District Court's Order by filing a Rule 60 motion. Even this case appears to be near an end.
Names lose exchange rate issue with Lloyd’s
In another of a series of cases involving Lloyd's enforcing UK judgments against Names for Equitas reinsurance premium, after losing on a summary judgment motion that enforced the UK judgment, a Name moved to set aside the judgment based upon an exchange rate provision. Finding the District Court did not err by applying the Utah Uniform Foreign-Money Claims Act, the Tenth Circuit affirmed the denial of the motion. Society of Lloyd's v. Bennett, Case No. 05-4069 (10th Cir. June 2, 2006). This appears to be one of those cases in which a party simply will not give up. Having lost in the English Courts and in the US District Court, while an appeal was pending to the Tenth Circuit, the Names sought to vacate or modify the District Court's Order by filing a Rule 60 motion. Even this case appears to be near an end.
Wisconsin Supreme Court vacates arbitration award
Construing the Wisconsin arbitration statute, the Wisconsin Supreme Court vacated an arbitration award in a dispute between Allstate Insurance Company and a policyholder on the basis that a party-appointed arbitrator demonstrated evident partiality. Borst v. Allstate Insurance Co., Case No. 2004 AP 2004 (Wisc. June 13, 2006). The arbitrator appointed by Allstate was an attorney who had a “substantial, ongoing attorney/client relationship with Allstate.” Even though the relationship was disclosed, and all parties were aware of the relationship going into the arbitration hearing, the Court found that disclosure and knowledge did not avoid the prohibition of such a relationship under Wisconsin law. The Court also strictly limited the permissible discovery depositions to those permitted by the Wisconsin statute.