Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

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Discovery

COURT ISSUES PROTECTIVE ORDER OVER DIRECT INSURER’S REINSURANCE CLAIM AND RESERVE INFORMATION

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Teck Metals Ltd. sued London Market Insurance in a direct insurance coverage action arising from alleged environmental pollution claims asserted by Federal, State, and Tribal authorities against Teck. London Market declined coverage for the claims under certain umbrella liability policies. Among a morass of various discovery issues in the case (some of which are the subject of a pending interlocutory appeal to the Ninth Circuit), Teck sought information from London Market pertaining to its notification of the claims to its reinsurers, as well as certain reinsurance claims and reserve information. A Magistrate recommended that the date, method of transmittal, and author of London Market’s first communication to its reinsurers is relevant to late notice issues and should be provided, but that reinsurance reserves and claim information was not relevant. The district court adopted the magistrate’s recommendations with some agreed-upon compromises, including a protective order regarding the reinsurance information. Teck also made a request under the Hague Convention to obtain the depositions of three London Market-affiliated foreign nationals, including two claims administrators and an underwriter. Teck Metals, Ltd. v. London Market Insurance, Case No. 05-411 (USDC E.D. Wash. Nov. 19, 2010).

This post written by John Pitblado.

COURT COMPELS DISCOVERY OF REINSURANCE INFORMATION RELATING TO LATE NOTICE DEFENSE

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Global Reinsurance denied reinsurance claims for asbestos claims, in part on the basis that it was notified late of the claims, and then refused to provide discovery that might have revealed that it had been advised of the claims by a third party or that it had sufficient knowledge of the claims to advise its own reinsurers of the claims. The court granted a motion to compel, rejecting the arguments in the opposition to the motion, denying discovery only as to issues that were withdrawn or previously determined, and hence moot in terms of discovery. Pacific Employers Insurance Company v. Global Reinsurance Corp. of America, Case No. 09-6055 (USDC E.D. Pa. Nov. 12, 2010).

This post written by Rollie Goss.

COURT REFUSES TO COMPEL DISCOVERY OF IRRELEVANT REINSURANCE AGREEMENTS

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In a dispute involving the interpretation of an excess policy issued by TIG Insurance Company, insured Grinnell Corporation moved to compel TIG to produce underwriting manuals, information relating to its reinsurance agreements, and reserve information. The court granted Grinnell’s request with respect to TIG’s underwriting manuals but rejected the insured’s request for information relating to TIG’s reinsurance agreements as irrelevant. The court held that “what TIG and its reinsurers may agree a term means . . . is not, ipso facto, probative of what that term means in the subject policy” and TIG’s coverage with its insureds was not necessarily co-extensive with the coverage TIG secured from reinsurers. The court also denied Grinnell’s request for reserve information, finding that TIG’s consideration of possible policy interpretations in setting reserves “is of little value in determining the meaning of a policy term or terms.” TIG Ins. Co. v. Tyco Int’l, LTD., Case No. 3:08-1584 (U.S.D.C. M.D. Pa. Nov. 12, 2010).

This post written by Ben Seessel.

COURT REFUSES TO MODIFY CONFIDENTIALITY ORDER PROTECTING INSURER’S AND REINSURER’S TRADE SECRETS FROM DISCLOSURE

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Pursuant to a confidentiality order entered by the federal district court, Everest National Insurance Company and Everest Reinsurance Company produced trade secrets, claims data, and other confidential information to Centrix Consolidated LLC and other parties to the litigation. Centrix, concurrently involved in liquidation proceedings in bankruptcy court, was served with a document request by the liquidating trustee for all documents produced in the Everest case, including all documents designated as confidential under the court’s protective order. Centrix looked to the court that had issued the confidentiality order for guidance on how to proceed. The court refused to modify its confidentiality order, finding that Everest had a legitimate business interest in maintaining the confidentiality of the requested documents. Everest Nat’l Ins. Co. v. Sutton, Case No. 07-722 (USDC D.N.J. Oct. 28, 2010).

This post written by Ben Seessel.

COURT COMPELS INSURER TO PRODUCE REINSURANCE AGREEMENTS AS PART OF FRCP 26 INITIAL DISCLOSURES

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In a dispute between a credit union and CUMIS Insurance Society, Inc., the credit union sought discovery on whether CUMIS had a reinsurer that could indemnify the parties for certain losses at issue in the action. CUMIS objected to disclosing its reinsurer on the grounds of relevancy, and the credit union moved to compel. The court granted the credit union’s motion and ordered CUMIS to produce its reinsurance agreements. The court held that when an insurer is a party to an action, reinsurance agreements to which the insurer is a party must be produced with the insurer’s Initial Disclosures, as required by Federal Rule of Civil Procedure 26(a)(1)(A)(iv). The court further held that the Rule was absolute and does not require a showing of relevance. The court found support in the Advisory Committee Notes to Rule 26, which explain that disclosure of insurance coverage enable counsel to make a “realistic appraisal of the case” for settlement and litigation strategy. Suffolk Federal Credit Union v. CUMIS Insurance Society, Inc., Case No. CV 10-0001 (USDC E.D.N.Y. Oct. 19, 2010).

This post written by Michael Wolgin.