In the massive MDL proceeding relating to alleged bid rigging and kickbacks in the insurance brokerage area, the Court has ruled on a motion to dismiss, holding as follows: (1) the McCarran-Ferguson Act exemption does not apply: (2) the antitrust claims are inadequately pled; (3) the RICO claims are inadequately pled; (4) the ERISA claims state a cause of action (although the Court found the facts to be sparse); and (5) the Court reserved ruling as to state law claims, until it decided which federal claims survived motion practice. The Court directed the plaintiffs to file more particular statements as to the antitrust and RICO claims, instead of requiring a further amended pleading. In re Insurance Brokerage Antitrust Litigation, Case No. MDL 1663 (D. N.J. Oct. 3, 2006).
Week's Best Posts
State court rules that Liquidation Act does not force payment of IBNR claims or avoid arbitration agreements
A New Jersey Appellate Court has agreed with arguments made by the Reinsurance Association of America, holding that a court could not, under the authority of New Jersey's Insurer Liquidation Act, adopt a plan that forced reinsurers to pay claims based upon IBNR estimates, and could not abrogate arbitration provisions contained in reinsurance agreements to force that disputes be litigated in the liquidation court. In re Liquidation of Integrity Insurance Company, Case No., C-7022-86, 2006 WL 2795343 (N.J. Super. A.D. Oct. 2, 2006).
California Insurance Code amended with respect to reinsurance matters
California has adopted amendments to its insurance code making changes regarding credit for reinsurance, insolvency of a ceding company, assets or deductions for reinsurance and foreign ceding insurers, and requirements with respect to the examination of reinsurance intermediaries. The new statute also requires that reinsurance intermediaries respond to subpoenas issued by arbitration panels. California Assembly Bill No. 2400, effective January1, 2007.
Nonadmitted and Reinsurance Reform Act passes House
The Nonadmitted and Reinsurance Reform Act of 2006 was passed by the House of Representatives by a vote of 417-0. The Senate is in recess for the election period, and it is not clear whether the Senate will take up this bill before the end of the year.
Court confirms award granting collateral estoppel effect to prior foreign trial decision
A reinsurer (Sphere Drake Insurance Limited) which successfully persuaded an arbitration panel to accord collateral estoppel effect to a decision of the London, England, Commercial Court, has convinced a District Court to confirm the award, which avoided four excess of loss reinsurance slips. The London Commercial Court had determined that the four slips at issue in the arbitration had been procured through fraud by the reinsurer’s broker, and were void. The startling aspect of this decision is that the reinsured in the arbitration, Lincoln National Life Insurance Company, had not been a party to the London case. The Court found that the decision did not violate due process, since Lincoln was in “privity” with the broker party to the London case due to a similarity of interests. Sphere Drake Insurance Limited v. Lincoln National Life Insurance Co., Case no. 05-6411 (N.D. Ill. Sept. 13, 2006). Given the deference given to arbitration awards, it may be very difficult for Lincoln to obtain reversal of this decision on appeal. Further background is provided in Sphere Drake’s motion for confirmation of the arbitration award. The London Commercial Court decision (Sphere Drake v. EIU) was the subject of an earlier entry in this blog.