Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

You are here: Home / Archives for Arbitration / Court Decisions / Reinsurance Claims

Reinsurance Claims

"UNAUTHORIZED" INSURER’S SUIT AGAINST REINSURERS SURVIVES

by

A Florida appellate court recently reversed a trial court’s decision to dismiss Advantage General Insurance Company's suit against its reinsurers, KILN and QBE Int’l. The trial court dismissed the suit finding that, under Florida statute § 626.903, Advantage was an unauthorized insurer and was barred from bringing suit in Florida courts. The Court of Appeals, however, ruled that in the reinsurance transaction at issue Advantage was the insured, not the insurer. Further, the Court of Appeals determined that the suit between Advantage and KILN & QBE did not “arise out of” Advantage’s alleged unauthorized sale of insurance to the original insured. Accordingly, the Court of Appeals held that it was improper to bar Advantage from access to the courts, and reversed and remanded the case. Advantage Gen. Ins. Co., Ltd. v. KILN/QBE Int’l, Case No. 4D08-1944, (Fla. Dist. Ct. App. Apr. 9, 2009).

This post written by John Black.

"UNAUTHORIZED" INSURER'S SUIT AGAINST REINSURERS SURVIVES

by

A Florida appellate court recently reversed a trial court’s decision to dismiss Advantage General Insurance Company's suit against its reinsurers, KILN and QBE Int’l. The trial court dismissed the suit finding that, under Florida statute § 626.903, Advantage was an unauthorized insurer and was barred from bringing suit in Florida courts. The Court of Appeals, however, ruled that in the reinsurance transaction at issue Advantage was the insured, not the insurer. Further, the Court of Appeals determined that the suit between Advantage and KILN & QBE did not “arise out of” Advantage’s alleged unauthorized sale of insurance to the original insured. Accordingly, the Court of Appeals held that it was improper to bar Advantage from access to the courts, and reversed and remanded the case. Advantage Gen. Ins. Co., Ltd. v. KILN/QBE Int’l, Case No. 4D08-1944, (Fla. Dist. Ct. App. Apr. 9, 2009).

This post written by John Black.

SUMMARY JUDGMENT GRANTED FOR VIOLATION OF CONSENT TO SETTLE PROVISION

by

Ace American Insurance Company (“Ace”) made claim for coverage from its reinsurer, Continental Casualty Company (“Continental”), for an $11.68 million settlement it entered into with its underlying insured in a first party coverage case which included bad faith claims against Ace. Continental declined coverage and instituted a declaratory action seeking a determination that it owed no coverage because (1) Ace settled the case without Continental’s approval as required under the consent to settle provision, and (2) given Ace’s $10m deductible, uninsured losses would have reduced the claim to less than the deductible.

The Court agreed with Continental, finding that an oral agreement to settle in principal, even though not consummated, was entered into by Ace prior to any attempt to obtain Continental’s consent thereto. The Court found this breach of the consent-to-settle provision dispositive, but also noted its agreement with Continental’s other claim that certain of the losses pertained to Ace’s exposure to non-covered punitive damages, which losses would have reduced the claim to less than the amount of Ace’s deductible. Continental Cas. Co. v. Ace American Ins. Co., Case No. 07-958 (USDC S.D.N.Y. May 31, 2009)

This post written by John Pitblado.

REINSURERS WILL NOT FEEL BROTHERLY LOVE; MOTION TO TRANSFER VENUE DENIED

by

Two Philadelphia-based reinsurance companies’ motion to transfer venue from New York to Philadelphia has been denied. Describing the proximity of the two cities as a “95-mile jaunt” and citing the availability of “rapid, efficient transit,” the court was not persuaded by the defendants’ argument that Philadelphia would be a more convenient forum for defense and a majority of non-party witnesses. Despite the reinsurers’ contention that the reinsurance claims and billings at issue were handled in Philadelphia, making it the locus of operative facts, the court found that because the contracts were made in New York, the defendants “should expect to be sued here.” This blog previously reported on this matter after TIG successfully moved the court to amend its complaint. See May 19, 2009 posting. TIG Ins. Co. v. Century Indemnity Co., Case No. 08-7322 (USDC S.D.N.Y. June 4, 2009).

This post written by Brian Perryman.

SUMMARY JUDGMENT AGAINST SWISS RE REVERSED BY THIRD CIRCUIT COURT OF APPEALS

by

As we reported on September 18, 2007, a federal court granted summary judgment to Airport Industrial Park, doing business as P.E.C. Contracting Engineers (“PEC”), as against Swiss Reinsurance America Corp. (“Swiss Re”), the reinsurer of a party with whom PEC contracted on a government construction project, which contracting included a general indemnity agreement (“GIA”). Swiss Re appealed, and the Third Circuit Court of Appeals held in its favor, reversing the trial court and remanding for further proceedings. First, the Circuit Court held that Swiss Re was unambiguously an intended beneficiary of the GIA, as “reinsurers” were explicitly mentioned therein, along with other “affiliates” of the reinsured. Second, the Court held that, even if the GIA was unambiguous, Pennsylvania law nonetheless allows a court to look to the parties’ custom and usage in interpreting a contract’s terms. It then cited material disputes of fact (and a less-than-complete factual record) with regard to the parties’ competing interpretations of the contract vis-à-vis the underlying parties’ custom and usage. Swiss Reinsurance America Corp. v. Airport Industrial Park, Inc., d/b/a P.E.C. Contracting Engineers, No. 07-3749 (3d Cir. May 5, 2009).

This post written by John Pitblado.