Reinsurance Claims Consultant Denied
Even though Lumbermen’s reinsurers rebated over $2 million in premiums to LMC after its reinsurance recoveries consultant alerted it to the fact that a change in the manner in which Kember was booking reinsurance premiums was contrary to procedures recommended by the NAIC, the Seventh Circuit has ruled in Indiana Lumbemens Mut. Ins. Co. v. Reinsurance Results, Inc., No. 07-1283 (7th Cir. January 16, 2008) that the consultant was not entitled to one-third share of the rebated premiums as it was not the result of any “premium and/or claims identified during the course of the review and have not been processed in accordance with the reinsurance contract terms and conditions” as required under its contract. Rather, the Seventh Circuit held that the change had resulted from an adjustment in Lumbermen’s internal accounting procedures and not as the result of any mistake with respect to how the reinsurance claims had been processed. The court also rejected the consultant’s arguments that it should be entitled to some recovery on a theory of quantum meruit.
