Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

Court denies request to overrule privilege claim in connection with alleged fraud

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A US District Court has denied a motion to overrule a Magistrate Judge's ruling, which denied a motion to overrule a claim of attorney-client privilege, in a case alleging fraud in a rent-a-captive insurance program involving Legion Insurance, which is in liquidation. The motion sought discovery from an attorney who allegedly participated in the alleged fraud. The circumstamces of the brief rulings are set out in the objections to the Magistrate Judge's ruling. Koken v. American Patriot Ins. Agency, Inc., Case No. 05-1049 (USDC ND Ill. Dec. 4, 2006).

Court compels arbitration under international arbitration convention

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A US District Court has held that arbitration should be compelled under the Convnetion on the Recognition and Enforcement of Foreign Arbitral Awards of a dispute between a Georga-based insured and a British insurer. The insurance hedged the insured's participation as an investor in a secondary market for life insurance policies. The Court found that although Georgia law invalidated arbitration agreements in insurance policies, and Georgia law applied to the interpretation of the arbitration agreement, the international convention superceded the McCarran-Ferguson Act, requiring arbitration despite Georgia law's hostility to such arbitration agreements. Goshawk Dedicated Limited v. Portsmouth Settlement Co., Case No. 06-274 (USDC ND Ga. Dec. 18, 2006).

Court denies late attempt to impose offset to arbitration award

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A California insurance agent arbitrated disputes with an insurance agency to which he had sold his business. The contract provided that any arbitration award would be subject to offsets. An offset claim was presented to the arbitrator, but the award made no mention of the offset request. After the confirmation of the award, the losing party sought to have the court impose the offset. A California Court of Appeal affirmed a ruling that the request was too late, that the party should have applied to the arbitrator to correct the award to specifically address the offset issue pursuant to a California statute, or should have raised the issue during confirmation proceedings. The Court specifically found that the strategy did not constitute an error of counsel for which the party should be provided relief. Kelly v. RMI Ins. Services, Inc., Case No. H030047 (Cal. Ct. App. Dec. 19, 2006).

Life, health and annuity reinsurance conference

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The American Council of Life Insurers and the Society of Actuaries are the organizing sponsors for ReFocus 2007, a conference focused primarily upon issues relating to life, health and annuity reinsurance. The conference will be held March 4-7, 2007, at the Hyatt Regency Lake Las Vegas Resort, Spa & Casino. See the program brochure provided by the event's program committee. For additional information, and to register for the conference, visit the conference's web site.