Cedent Loses Motion For Reinsurance Payments Due To Late Notice And “Unsatisfactory” Proof Of Loss, Notwithstanding “Follow The Settlements” Provisions

Carlton Fields
Contact

In a reinsurance coverage dispute involving coverage for an underlying settlement of asbestos liability, a New York court considered whether the defenses of failure to provide prompt notice and failure to provide satisfactory proof of loss precluded summary judgment in favor of the cedent. The cedent relied on “follow the settlements” provisions contained in each of the relevant four facultative reinsurance certificates. The court, however, was not convinced that these provisions entitled the cedent to coverage. One of the certificates, the court found, provided for prompt notice as a condition precedent to coverage. The court ruled that the cedent, which had submitted notice of claim to the reinsurer in 2010, had been required to provide notice of the asbestos settlement “in 2006 at the latest, when the settlement agreement was executed.” As a result, no prejudice from the late notice needed to be demonstrated, and the reinsurer was not obligated to indemnify the cedent for unpaid losses under that certificate. For the three other reinsurance certificates, which did not contain provisions deeming prompt notice a condition precedent to coverage, the court still denied the cedent summary judgment as premature, finding that the cedent failed to demonstrate that it had satisfied the certificates’ requirements to “provide[] proofs of loss in a form satisfactory to” the reinsurer. The court did rule in favor of the cedent, however, with respect to one of three reinsurance billings, where the reinsurer waived its defenses by making an initial payment without any reservation of rights. Lexington Insurance Co. v. Sirius America Insurance Co., Index No. 651208/2012 (N.Y. Sup. Ct. Sept. 18, 2014).

 

 

Written by:

Carlton Fields
Contact
more
less

Carlton Fields on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide