Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

PLATINUM UNDERWRITERS IS THE EIGHTEENTH FOREIGN REINSURER ALLOWED TO OPERATE UNDER FLORIDA’S REDUCED COLLATERAL REQUIREMENTS

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By Consent Order dated December 13, 2011, the Florida Office of Insurance Regulation approved the application of Bermuda reinsurer Platinum Underwriters Bermuda, Ltd. to operate in Florida with posting less than 100% collateral. The Order recites Platinum’s fulfillment of statutory criteria, and notes Platinum’s demonstration of $1.366 billion in capital and surplus and favorable ratings from two accepted agencies. According to the Office’s December 14, 2011 press release, Platinum is the sixteenth Bermuda reinsurer approved to use Florida as its port-of-entry state, in addition to a Germany company and a U.K. company. In the Matter of: Platinum Underwriters Bermuda, Ltd., Case No. 122414-11-CO (Fla. Office of Insurance Regulation Dec. 13, 2011).

This post written by John Pitblado.

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COURT ADHERES TO DECISION DISQUALIFYING COUNSEL FOR OBTAINING INTRA-PANEL EMAILS FROM APPOINTED ARBITRATOR

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A federal district court denied Insco’s motion for reconsideration of the court’s order disqualifying Insco’s counsel from further representing it in a pending arbitration because the law firm had improperly procured intra-panel emails from Insco’s appointed arbitrator. On November 1, 2011, we reported that the court had disqualified Insco’s counsel, and, on November 11, 2011, we conveyed that the court had denied Insco’s request to submit a declaration by one of its attorneys in support of its motion for reconsideration. In its order denying the motion for reconsideration, the court reiterated its conclusions that counsel acted inappropriately in obtaining the emails and that the disclosure of the emails tainted the underlying proceedings. Northwestern Nat’l Ins. Co. v. Insco, Ltd., Case No. 11 Civ. 1124 (USDC S.D.N.Y. Nov. 15, 2011), Insco filed a notice of appeal and a motion to stay pending appeal. The district court has entered a rather extensive Order which acknowledges that the disqualification would prejudice Insco but defends its prior decisions and denies the motion to stay, meaning that the arbitration should proceed during the appeal with new counsel for Insco. Northwestern Nat’l Ins. Co. v. Insco, Ltd., Case No. 11 Civ. 1124 (USDC S.D.N.Y. Dec. 6, 2011),

This post written by Ben Seessel.

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COURT APPLIES CONCEPCION AND COMPELS ARBITRATION DESPITE PROHIBITIVE COSTS OF INDIVIDUAL CLAIMS

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In what was a putative class action, a federal court recently applied the U.S. Supreme Court’s Concepcion decision and compelled arbitration on an individual basis, despite the potential prohibitive costs of asserting claims individually. A putative consumer class action was brought against AT&T Mobility by a plaintiff who had agreed to arbitrate disputes only on an individual basis – and not as a class action. The plaintiff initially prevailed in avoiding arbitration, relying on California law. Prior to class certification, however, the U.S. Supreme Court decided the Concepcion case, which held the FAA preempts state laws that preclude class action waivers. Arguing that Concepcion conflicts with the court’s initial decision in this case, AT&T renewed its motion to compel arbitration. The court granted AT&T’s motion, rejecting plaintiff’s argument that Concepcion should only be applied where arbitration on an individual basis would be cost effective, i.e., where the plaintiff had substantial individual claims. The court was not persuaded by the plaintiff’s citation to an earlier Supreme Court ruling and a Second Circuit decision predating Concepcion, and noted that plaintiff’s position that a court should conduct a case-by-case cost-benefit analysis was “unworkable.” Kaltwasser v. AT&T Mobility LLC, Case No. 5:07-cv-00411 (N.D. Cal. Sept. 20, 2011).

This post written by Michael Wolgin.

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COURT DISMISSES FRAUD-BASED CHALLENGES TO PARTY-APPOINTED ARBITRATOR BROUGHT ANEW AFTER LOSING APPEALS

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Trustmark Insurance Company challenged in court the impartiality of John Hancock Life Insurance Company’s party-selected arbitrator. As we have reported at each stage, Trustmark’s challenge lost at the district court, lost in the Seventh Circuit, and was denied review by the U.S. Supreme Court. Trustmark then filed a second amended complaint, in an attempt to avoid the issues it lost on appeal, including new fraud allegations. Trustmark also brought a Rule 60(b)(3) motion for relief from the court’s original order, based on alleged fraud by the opposing party. The court dismissed the new claims in the second amended complaint and denied the 60(b)(3) motion, finding it time-barred. Trustmark Ins. Co. v. John Hancock Life Ins. Co., No. 1:09-cv-03959 (USDC N.D. Ill. Nov. 15, 2011).

This post written by John Pitblado.

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TREATY TIP: NAILING DOWN THE ARBITRATION PROCESS

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Arbitration can proceed more quickly and efficiently if one pays appropriate attention to the arbitration process in drafting reinsurance agreements. Tony Cicchetti continues his series of Treaty Tips with advice on how to avoid unnecessary litigation through better agreement drafting, in Nailing Down the Arbitration Process.

This post written by Anthony Cicchetti.

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