Reinsurance Redux - May 2013

In This Issue:

- District of New Jersey Stays Medical Malpractice Suit Pending Arbitration:

Finding that a dispute between a medical malpractice insurer and a reinsurance underwriter fell squarely within the plain meaning of the broad arbitration clause in a reinsurance agreement, and that a service of suit clause did not serve as an exception allowing the insurer to litigate its claims, the United States District Court for the District of New Jersey recently remanded a pending lawsuit to arbitration. New Jersey Physicians United Reciprocal Exchange d/b/a NJ Pure v. Ace Underwriting Agencies, Ltd., et al., No. 12-04397, 2013 WL 1558716 (D.N.J. April 11, 2013).

- District of Connecticut Grants Reinsurer’s Motion to Compel Discovery Regarding Factual Issues Surrounding Insurer’s Post-Settlement Allocation Decision Despite Presence of “Follow the Settlements” Clause:

In granting two motions to compel, the United States District Court for the District of Connecticut recently held that a reinsurer is entitled under New York law to discovery in connection with its challenge of the reasonableness of an insurer’s post-settlement allocation decision and other related factual issues despite the presence of a “follow the settlements” clause in the reinsurance treaty. Travelers Indemnity Co. v. Excalibur Reinsurance Corp., No. 3:11-CV-1209, 2013 WL 1409889 (D. Conn. April 8, 2013).

- On Reconsideration, District of New Jersey Finds That Reinsurer Cannot Prove Prejudice for Purposes of Late Notice Defense, But That Question of Law Exists Regarding Adequacy of Reporting Under Sunset Provision:

On a motion for reconsideration, the United States District Court for the District of New Jersey amended its prior grant of summary judgment in favor of the plaintiff cedent on the defendant reinsurer’s late notice defense, holding that the reinsurer could not prove prejudice as a matter of law, but that a genuine issue of material fact remained as to the adequacy of the cedent’s claims reporting for purposes of a sunset provision that was a condition precedent to the reinsurer’s indemnity obligations under the retrocession contracts at issue. Munich Reinsurance America, Inc. v. American National Insurance Co., – F. Supp. 2d – , 2013 WL 1314730 (D.N.J. Mar. 28, 2013).

Please see full publication below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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