Reinsurance Redux - March 2013

by Saul Ewing Arnstein & Lehr LLP

In This Issue:

- New York Court of Appeals Reverses Decision Requiring Reinsurers to Follow the Fortunes on Asbestos Settlement Where There Were Questions of Fact With Respect to Reasonableness of Reinsured’s Settlement Decisions:

The New York Court of Appeals reversed the decisions of the Supreme Court and Appellate Division and held that there were questions of fact as to whether reinsurers were required to follow the fortunes with respect to settlement allocations of asbestos claims, where the reinsured failed to allocate any portion of settlements to bad faith. United States Fid. & Guar. Co. v. American Re-Insurance Co. 2013 NY Slip Op 00784, 2013 WL 451666 (N.Y. Feb. 7, 2013).

- The Washington Supreme Court Holds That State Statute Invalidates Mandatory Arbitration Provisions in Insurance Contracts:

In an en banc decision, the Washington Supreme Court affirmed the decision that a Washington state statute, which prohibits any agreement in insurance contracts from depriving the court of jurisdiction of an action against the insurer, voided mandatory arbitration provisions in insurance contracts. State Department of Transportation v. James River Insurance Co. , 292 P.3d 118 (Wash. 2013).

- New York State Court Holds That Umpire Who Would Resolve Disagreement Between Arbitrators Should Be Chosen Before Arbitration Commences:

The New York Supreme Court for New York County held that when an arbitration provision calls for the selection of an umpire to resolve any disagreement between the two arbitrators selected by the parties during arbitration, the umpire should be chosen before the arbitration commences as opposed to after a disagreement arises between the arbitrators. In re American Home Assurance Co., – N.Y.S.2d – , 2013 WL 172210 (N.Y. Supr. Ct. Jan. 15, 2013).

- Minnesota District Court Stays Reinsurance Case Pending Arbitration Of Claims:

The United States District Court for the District of Minnesota granted defendants’ motions to stay pending arbitration in a complex reinsurance security dispute. Sec. Life Ins. Co. of Am. v. Sw. Reinsure, Inc. , No. 11-1358, 2013 WL 500362 (D. Minn. Feb. 11, 2013).

- Connecticut District Court Grants Motion To Amend Complaint In Suit Against Reinsurer:

The United States District Court for the District of Connecticut granted an insurer’s motion to amend its complaint against a reinsurer after determining that additional claims for account stated and violation of Connecticut Unfair Trade Practices Act were plausible and would not prejudice the reinsurer. Travelers Indem. Co. v. Excalibur Reinsurance Corp. , No. 3:11-CV-1209, 2013 WL 424535 (D. Conn. Feb. 1, 2013).

Please see full newsletter 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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