The UK Court of Appeals has interpreted a provision in a reinsurance slip that simply said “Jurisdiction Clause” as being essentially meaningless, evidencing an intention to agree upon a jurisdiction clause, where such an agreement was never reached. The Court considered extrinsic evidence, and declined to import a clause from underlying insurance that provided for jurisdiction in Mauritius. The effect of the decision was to permit the courts to apply UK law to the dispute. Dornoch Ltd. v. Mauritius Union Assur. Co., [2005] EWHC 1887 (Comm.) (April 10, 2006).
Mississippi Supreme Court upholds assumption reinsurance agreement
The Mississippi Supreme Court has affirmed the grant of summary judgment in favor of two insurance companies that entered into assumption reinsurance agreements to transfer workers' compensation risks to Legion Insurance. After Legion was placed in liquidation, the Mississippi Insurance Guaranty Association unsuccessfully attempted to hold the companies responsible for losses. The Court held that the agreements constituted a novation, removing the companies from the risk. Mississippi Ins. Guaranty Ass'n. v. MS Casualty Ins. Co., Case No. 2005-01158 (Oct. 26, 2006).
NAIC Reinsurance Task Force meeting summary
The summary of the meetings of the NAIC's Reinsurance Task Force on December 9, 2006 and December 11, 2006 at the 2006 Winter Meeting has been posted on the NAIC's Internet site. It provides a brief description of the action taken on the proposed creation of the Reinsurance Evaluation Office to rate the financial strength of reinsurers as a basis for a collateral requirement, stating that the proposal should be “further refined” by the NAIC's Financial Condition (E) Committee no later than September 2007.
Court holds that policies covering WTC provided for replacement only
A District Court has held that policies providing property coverage for the World Trade Center (“WTC”) complex , which provided “replacement cost” coverage, provided coverage limited to what it would cost to replace the covered buildings as they stood immediately prior to their destruction, and did not cover additional amounts to make the re-built WTC safe, modern and politically palatable. SR International Business Ins. Co. v. World Trade Center Properties LLC, Case No. 01-9291 (USDC SDNY Oct. 31, 2006).
Connecticut Task Force recommends run-off regulation for solvent insurers
A Task Force appointed by the Connecticut Insurance Commissioner has issued a report proposing the adoption of statutes and regulations to oversee the run-off of solvent companies. Such oversight would be exercised by the Department of Insurance. The report notes the experience of the UK in this area and moves to provide a similar mechanism in several states in the US.