The follow the settlements doctrine has been applied to business interruption and property damage claims filed by the owner of Universal Studios theme park in Florida, arising out of Hurricane Floyd. The Court granted summary judgment to the reinsured, finding that the reinsurer had not proven that the claims were paid in bad faith or that the claims were not reasonably within the terms of the underlying policy. Houston Casualty Co. v. Lexington Insurance Co., Case No. 05-1804 (USDC SD Tex. June 15, 2006). Two facts were of particular interest: (1) the hurricane changed course, and did not actually hit the park, making actual physical damage attributable to the storm fairly minimal; and (2) although the park was only closed for a single day, the business interruption claim extended over several more days.
Connecticut Insurance Department publishes notice of intention to revise reinsurance regulations
The Connecticut Insurance Department has published notice of its intention to amend its current regulations concerning credit for reinsurance to delete the provision that relates to the disposition of assets of a single beneficiary trust on the insolvency of the reinsurer/grantor. Comments will be received prior through September 22, 2006.
New Jersey court rejects creative malpractice claim against reinsurance broker
In litigation over asbestos-related coverage that has been onging for 20 years, a New Jersey trial court has rejected claims for reinsurance broker malpractice or breach of contract, independent of whether the broker in fact procured coverage, when an insurer was able to raise colorable defenses to coverage such that summary judgment on the coverage issue was not possible. The Court found that such a cause of action would “stretch the limits of malpractice claims beyond any reasonable boundry by giving rise to myriad ill-defined and amorphous issues as to the contours of such a cause of action which would result in insurance claim litigation being more never ending than it already is.” The Court required that the claimant prove that coverage had not been obtained in order to establish liability. Owens Insurance, Ltd. v. Reiss Holdings, Ltd., Docket No. L-9575-02, in the Superior Court of New Jersey, Law Division, Middlesex County (June 14, 2006). In earlier proceedings, the reinsured had taken the position that even if coverage had been obtained, if the coverage did not encompass all of the risks that the broker had been instructed to reinsure, the reinsured would seek to hold the broker liable for any unreinsured losses. This might be a particularly interesting claim here, since the broker, and its affiliates, had set up a captive insurance company that was the reinsured under the treaties at issue, and hence were driving forces in the structuring of the risks and the various layers of insurance and reinsurance. It is not clear whether the reinsured will pursue that theory.
Names lose exchange rate issue with Lloyd's
In another of a series of cases involving Lloyd's enforcing UK judgments against Names for Equitas reinsurance premium, after losing on a summary judgment motion that enforced the UK judgment, a Name moved to set aside the judgment based upon an exchange rate provision. Finding the District Court did not err by applying the Utah Uniform Foreign-Money Claims Act, the Tenth Circuit affirmed the denial of the motion. Society of Lloyd's v. Bennett, Case No. 05-4069 (10th Cir. June 2, 2006). This appears to be one of those cases in which a party simply will not give up. Having lost in the English Courts and in the US District Court, while an appeal was pending to the Tenth Circuit, the Names sought to vacate or modify the District Court's Order by filing a Rule 60 motion. Even this case appears to be near an end.
Names lose exchange rate issue with Lloyd’s
In another of a series of cases involving Lloyd's enforcing UK judgments against Names for Equitas reinsurance premium, after losing on a summary judgment motion that enforced the UK judgment, a Name moved to set aside the judgment based upon an exchange rate provision. Finding the District Court did not err by applying the Utah Uniform Foreign-Money Claims Act, the Tenth Circuit affirmed the denial of the motion. Society of Lloyd's v. Bennett, Case No. 05-4069 (10th Cir. June 2, 2006). This appears to be one of those cases in which a party simply will not give up. Having lost in the English Courts and in the US District Court, while an appeal was pending to the Tenth Circuit, the Names sought to vacate or modify the District Court's Order by filing a Rule 60 motion. Even this case appears to be near an end.