Zurich American, as reinsured, sued its reinsurer, R & Q Reinsurance, alleging that R&Q had breached its reinsurance obligations by not paying its full share of a settlement reached by Zurich with its insured. The dispute involved the allocation of policy limits among successive policies applicable to the loss. Zurich sought discovery of other instances in which R&Q had denied payments based upon allocation disputes. The Court found that R&Q's handling of similar claims might be relevant in the interpretation of the contract at issue, and ordered the production of certain information and the sampling of a claims database maintained by R&Q. Zurich American Ins. Co. v. Ace American Reinsur. Co., Case No. 05-9170 (USDC S.D.N.Y. Dec. 22, 2006).
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Fifth Circuit elaborates upon manifest disregard of law standard
Quoting from one of its own 2004 opinions, the Fifth Circuit has elaborated upon the standard for finding that an arbitration award is in manifest disregard of law, holding that such a finding requires proof of two elements: (1) that the legal error must have been obvious and capable of being readily and instantly perceived by the average person qualified to serve as an arbitrator; and (2) that the award results in a significant injustice. The first element includes a need to demonstrate that the arbitrator appreciated the existence of a clearly governing principle of law, but decided to ignore or pay no attention to such principle. The arbitration hearing at issue was not reported. The Court concluded that “[h]aving failed to secure a record of the arbitration proceedings, and without any evidence that the arbitral panel was aware of the Fifth Circuit standard [for awarding attorneys' fees], OneBeacon cannot make this showing, so its claim that the award was in 'manifest disregard' of the law fails ….” OneBeacon America Ins. Co. v. Turner, Case No. 06-20302 (5th Cir. Oct. 30, 2006).
Mealey’s 14th Annual Insurance Insolvency & Reinsurance Roundtable
Information is now available regarding Mealey's 14th Annual Insurance Insolvency & Reinsurance Roundtable, to be held April 25-28, 2007, at The Fairmont Scottsdale Princess in Phoenix, Arizona.
Mealey's 14th Annual Insurance Insolvency & Reinsurance Roundtable
Information is now available regarding Mealey's 14th Annual Insurance Insolvency & Reinsurance Roundtable, to be held April 25-28, 2007, at The Fairmont Scottsdale Princess in Phoenix, Arizona.
Court refuses to imply follow the fortunes doctrine into reinsurance agreements
In a matter involving the reinsurance of asbestos-related risks, a District Court has followed what it considered to be both the majority rule, and the better reasoned path, declining to imply the follow the fortunes doctrine into reinsurance agreements, where the facultative reinsurance agreements did not contain such a provision. The Court then denied summary judgment to the reinsured, finding that there were disputed issues of material fact as to whether certain excess insurance had been exhausted, a requirement for the applicability of the reinsurance, and whether an exclusion applied. The American Ins. Co. v. American Re-Ins. Co., Case No. 05-01218 (USDC N.D. Cal. Nov. 27, 2006). Shortly after this opinion was entered, the parties notified the Court that they had reached a settlement of their disputes.