Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

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Week's Best Posts

Winter 2007 Journal of Reinsurance

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The Winter 2007 issue of the Journal of Reinsurance is out. Published by the Intermediaries & Reinsurance Underwriters Association, articles in the current issue include:

  • Eugene Wollan, Reinsurance Arbitrations: it's all in the point of view;
  • John Gavin, IRMA Will Transform the Relationship Between Reinsurers and Receivers, about the NAIC's Insurer Receivership Model Act;
  • Frank Achert and Arthur White, Solvency II: preparing for the dawn of a new day, about solvency regulation changes in the European Union; and
  • Bina Dagar, The Reinsurance Underwriting Audit: an essential process.

Further information about the articles, and suscription information, may be found at the IRU's Internet site.

Surplus lines/reinsurance bill reintroduced in Congress

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Last fall, the Nonadmitted and Reinsurance Reform Act passed the house 417-0, but was not considered by the Senate due to its late passage in the House. A substantially similar bill has been introduced in the House, H.R. 1065. The bill subjects nonadmitted insurers to the premium tax laws of the policyholder's home state, and makes reinsurers subject to the solvency laws of their state of domicile under most circumstances. Due to an amendment to the definition of “qualified risk manager,” the new bill has the support of the Risk & Insurance Management Society, which did not support the bill last year.

District Court vacates attorney fee award portion of arbitration award

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Following arbitration of a dispute between parties to a coinsurance arrangement, an arbitration panel awarded attorney and arbitrator fees and costs to one party. A District Court confirmed the award, but vacated the award of fees and costs, which exceeded three million dollars, concluding that the award exceeded the arbitrators’ powers. The court relied on the terms of the coinsurance agreements, which expressly stated that “[e]ach party shall bear the expense of its own arbitrator…and related outside attorneys’ fees.” The court held that despite the breadth of the agreements to arbitrate, these provisions made clear that the arbitrators had no authority to award outside attorneys’ fees. The Court's decision is reflected in an Order, and a Judgment, with additional information about the case available in Memoranda filed by Reliastar and EMC National Life. Reliastar Life Insurance Company of New York v. EMC National Life Insurance Company, No. 06-cv-10186 (S.D.N.Y., February 13, 2007).

Tenth Circuit adopts arbitral immunity doctrine

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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).

Hannover Re issues $106 million cat securitization

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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.