Reinsurance Redux - Winter 2014

In This Issue:

- New York District Court Grants Summary Judgment for Reinsurer Where Insured’s Loss Did Not Reach Attachment Point Necessary to Trigger Coverage:

The United States District Court for the Southern District of New York granted summary judgment in favor of a reinsurer who had denied coverage to a cedent where the amount of loss claimed failed to reach the attachment point necessary to trigger reinsurance coverage because the interest component of a judgment against the underlying insured was not a “loss” under the terms of the reinsurance certificate. Seneca Insurance Company, Inc. v. Everest Reinsurance Co., No. 11-7846(KBF), 2013 WL 5720455 (S.D.N.Y. Oct. 17, 2013).

- Eastern District of Michigan Enjoins Arbitration Proceedings Because of Ex Parte Communications Between Counsel and Arbitrator:

The United States District Court for the Eastern District of Michigan issued a preliminary injunction enjoining arbitration proceedings to allow an investigation into allegations of ex parte communications with an arbitrator and other improprieties. Star Insurance Co. v. National Union Fire Insurance Co. of Pittsburgh, No. 13-13807, 2013 WL5182745 (E.D. Mich. Sept. 12, 2013).

- Florida District Court Dismisses Claims for Reimbursement of Defense Costs Under Reinsurance Treaty and Equitable Estoppel:

The United States District Court for the Middle District of Florida dismissed with prejudice an insurer’s claims for defense costs from its reinsurer under either the terms of the reinsurance treaty or an equitable estoppel theory. Public Risk Management of Florida v. One Beacon Insurance Co., No. 6:13-1067-Orl-31TBS, 2013 WL 5705575 (M.D. Fla. Oct. 18, 2013).

- Seventh Circuit Affirms Decision of District Court Requiring Insurance Broker to Pay Rebate to Insurer Even After Termination of Agreement with Broker:

The United States Court of Appeals for the Seventh Circuit affirmed the decision of the United States District Court for the Northern District of Illinois following a bench trial in which the district court determined that an insurer was entitled to a rebate under its contract with an insurance broker even though the contract was not renewed. Homeowners Choice, Inc. v. Aon Benfield, Inc., – Fed. App’x –, No. 13-1846, 2013 WL 6670981 (7th Cir. Dec. 19, 2013).

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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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