Reinsurer and Corporate Officer Held Liable Under Chapter 93A for Disavowing Reinsurance Agreement and “Stringing Along” the Cedent

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In an important decision with implications for cedents and reinsurers alike, the District Court for the District of Massachusetts, after a two-week bench trial, has held a reinsurer and its controlling officer liable under Chapter 93A (Massachusetts Unfair and Deceptive Trade Practices Act) for their bad-faith disavowal of a reinsurance agreement.1 Trenwick Am. Reins. Corp. v. IRC, Inc. reaffirms the court’s prior holding in Seven Provinces2 that, where a “moving target” strategy is employed to coerce a favorable compromise of reinsurance obligations, it may constitute a violation of Chapter 93A. Judge Nancy Gertner’s decision, which found that the defendants here “turned what should have been a routine claim against a reinsurer into a tortuous marathon,” 3 also includes noteworthy discussion of the status of the Follow the Fortunes doctrine in Massachusetts.

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Mintz Levin on:

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