Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

NEW YORK ADOPTS EMERGENCY AMENDMENT TO EXCESS LINES REGULATION

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The New York State Department of Financial Services has, on an emergency basis published in the State Register on August 1, 2012, adopted amendments to Insurance Regulation 41, concerning excess (or surplus) lines insurance. The purpose of the amendment is to implement the changes to the New York insurance code which were adopted in 2011 to conform the law to the Nonadmitted and Reinsurance Reform Act portion of the Dodd-Frank Act, which addressed certain issues regarding the writing of excess and surplus lines insurance.

This post written by Rollie Goss.

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COURT DETERMINES REINSURANCE AGREEMENT AND GENERAL AGENCY AGREEMENT OBLIGATIONS STRICTLY GOVERNED BY CONTRACT

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Lincoln General Insurance Company and U.S. Auto Insurance Services, Inc., as managing general agent for State and County Mutual Fire Insurance Company, entered into general agency agreements and reinsurance agreements. Disputes arose as to the amount due to Lincoln under the agreements, and litigation ensued. Lincoln brought a variety of claims, including breach of contract, misappropriation and conversion, breach of trust and/or fiduciary duties, aiding and abetting breach of trust and/or fiduciary duties and tortious interference with contract. The court found that there was no fiduciary duty involved in these relationships, and essentially found that the relationship was governed by the terms of the written agreements, without any implied torts. It dismissed all of the claims except for the breach of contract and tortious interference with contract claims. Lincoln General Insurance Company v. U.S. Auto Insurance Services, Inc., Case No. 10-2307 (USDC N.D. Tex. Aug. 30, 2012).

This post written by Rollie Goss.

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ROUNDUP OF FEDERAL DECISIONS ON MOTIONS TO COMPEL ARBITRATION

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Following is a summary of court decisions, some compelled, others denying, arbitration:

Authenment, III v. Ingram Barge Co., Case No. 10-2107 (USDC E.D. La. July 13, 2012) (granting West of England Shipowner’s Mutual’s motion to stay pending arbitration in a case initially brought against West of England’s insured, notwithstanding that plaintiff was non-signatory to arbitration agreement; holding that Convention on the Recognition and Enforcement of Foreign Arbitral Awards supersedes Louisiana’s statute prohibiting arbitration agreements in insurance contracts).

ISC Holding AG v. Nobel Biocare Finance AG, No. 11-239 (2d Cir. July 25, 2012) (affirming order dismissing with prejudice petition to compel arbitration and vacating petitioner’s notice of voluntary dismissal; holding that Rule Federal Rule 41(a)(1)(A)(i) does not apply in the context of petitions to compel arbitration).

Wooten v. Fisher Invest., Inc., No. 11-2476 (8th Cir. July 26, 2012) (affirming that district court properly dismissed without prejudice plaintiff’s state and federal statutory claims because they were subject to an ongoing arbitration that was required to be completed before remedies could be pursued in federal court).

Gove v. Career Sys. Dev’l Corp., No. 11-2468 (1st Cir. July 17, 2012) (affirming that employment discrimination claims brought by applicant against potential employer were not subject to compulsory arbitration because arbitration agreement was ambiguous as to whether claims brought by applicants that were not hired were subject to arbitration provision).

Union Elec. Co. v. Aegis Energy Syndicate 1225, Case No. 4:12CV87 (USDC E.D. Mo. Aug. 23, 2012) (denying insurer’s motion to compel arbitration; holding that Missouri choice of law and forum selection clause in policy endorsement prevails over alternative resolution provision in policy).

This post written by Ben Seessel.

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COMMUTATION AGREEMENTS BETWEEN RELIANCE INSURANCE COMPANY (IN LIQUIDATION) AND THREE REINSURERS APPROVED

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A Pennsylvania court has approved commutation agreements between Reliance Insurance Company (in Liquidation) and reinsurers Connecticut General Life Insurance Company (“Connecticut General”), Phoenix Life Insurance Company (“Phoenix”), and Hannover Rueckversicherung AG and E + S Rueckversicherung AG (“Hanover”), respectively. The Reliance Estate will receive $7,044,565 from Connecticut General and $5,017,408 from Phoenix for commuting obligations on reinsurance policies written through Unicover Managers covering workers’ compensation losses. Hanover will pay $4,790,789 to the Reliance Estate in exchange for commuting liabilities on reinsurance contracts covering various lines of business including accident and health, aviation liability, and D&O liability.

This post written by Ben Seessel.

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CALIFORNIA COURTS CONTINUE TO CONTEND WITH CONCEPCION

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Two recent California Appellate Court decisions address class arbitration waivers post-AT&T Mobility v. Concepcion, the 2011 U.S. Supreme Court case that dramatically curtailed parties’ ability to challenge class action waivers in arbitration agreements. In Caron v. Mercedes-Benz Financial Services USA, LLC, No. G044550 (June 29, 2012), the Court reviewed a trial court decision denying a motion to compel, based on the anti-class-action-waiver provision of California’s Consumer Legal Remedies Act. The Appellate Court reversed, citing Concepcion, and holding that the CLRA is pre-empted by the FAA, because it acts as an obstacle to the FAA’s intention of enforcing arbitration agreements.

Likewise, in Truly Nolen of America v. Superior Court, No. D060519 (Aug. 9, 2012), the Appellate Court reversed an order allowing class-wide arbitration. The trial court had granted a motion to compel arbitration of a putative class action labor dispute, but denied the employer’s motion to direct individual arbitration, instead allowing class-wide arbitration of the claims. The employer appealed and the Appellate Court reversed, citing Concepcion. However, it remanded with instructions that the trial court hear arguments and evidence on whether the arbitration agreement in fact contained an implied right to class-wide arbitration, as argued by the plaintiff class, including extrinsic evidence of intent, if necessary, and to then rule anew on the issue of whether class-wide arbitration should be allowed.

This post written by John Pitblado.

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