The London Personal Accident Reinsurance market experienced underwriting difficulties and spirals in the latter half of the 1990s. In an extensive opinion, a UK Commercial Court judge found that problems in this market were caused largely by undisclosed gross loss making underwriting, in which the reinsurance brokers had a prominent role. Sphere Drake Insurance Limited v. Euro International Underwriting Limited, Stirling Cooke Brown Reinsurance Brokers Limited, et al., 2003 EWHC 1636 (High Court of Justice, Queens Bench Division Commercial Court July 8, 2003).
Arbitration / Court Decisions
UK – Duty of disclosure and avoidance of reinsurance
Appeal of decision with respect to attempted avoidance of reinsurance, with an extensive discussion of the duties of disclosure and the underwriting process. Court of Appeals held that a reinsured under an excess of loss reinsurance agreement did not owe its reinsurers an implied duty of care to underwrite ceded risks in a prudent manner. Available at Bonner & Ors v. Cox & Ors, 2005 EWCA Civ 1512 (Court of Appeal Civil Division December 8, 2005).
Annual summary of developments in the law of reinsurance
Recent Developments in Excess Insurance, Suplus Lines Insurance, and Reinsurance Law, 40 Tort Trial & Insurance Prac. L. J. 397 (2005). Article covering development during 2005 in excess insurance, surplus lines insurance and reinsurance. The reinsurance portion of this article covers three broad issues, coverage, arbitration and litigation, with the following subparts: Coverage – following liability, utmost good faith, aggregation and annualization, late notice, extracontractual obligations, privity and cut-through and terrorism; Arbitration – arbitrability, stay of litigation or arbitration proceedings, panel composition, consolidation, confirmation/vacation of awards, discovery and confidentiality of award; Litigation – in personam jurisdiction and indispensable parties, subject matter jurisdiction, forum non conveniens/improper forum, discovery and insolvency. Available on WESTLAW at 40 TTIPLJ 397.
UK Financial Services Authority
Web site of the UK regulatory body, the Financial Services Authority (FSA)a>.
Arbitration compelled despite exception to agreement to arbitrate
Court compels arbitration of disputes with respect to two excess of loss reinsurance agreements covering medical malpractice liability insurance. The court interpreted an exception to the arbitration provision to be limited to disputes over the validity or formation of the reinsurance agreements. Medical Insurance Exchange of California v. Certain Underwriters at Lloyds, London, 2006 WL 463531 (N.D. Cal. Feb., 24, 2006) (slip opinion).