National Insurance Law Forum : Insurance Litigation Lawyer & Attorney : National Insurance Law Forum : Insurance Coverage, Bad Faith Litigation

The Massachusetts Reinsurance Bar Association (MReBA), of which I am the Secretary, is hosting its third annual claims symposium at the Harvard Club in Boston.  Registration is $150 for industry people and $250 for others.  To register, go to the MReBA web site:  www.mreba.org

This year's keynote speaker will be Tracey Laws, Senior Vice President and General Counsel of the Reinsurance Association of America. She will focus her remarks on the current regulatory climate in which all of us conduct business.

The focus of this year's symposium will be on communications, relationships and privilege issues.  In the wake of last year's Regence debacle, there is great urgency to finding ways to preserve traditional means of communication, auditing and claims association without imperilling the cedent's defenses by forfeiting attorney-client privileges.

The symposium will feature three panels where outside counsel and senior industry claims people will discuss:

1. Protecting Attorney-Client Privilege in Communications Among Cedents and Reinsurers

This panel will explore the balance between a reinsurer’s need for information about an underlying claim and the risks of losing attorney-client privilege when information is conveyed to a reinsurer.

2. “Right of Association” and “Claims Control” Clauses

This panel of MReBA members will address the contractual wordings that govern the relative rights and responsibilities of cedents and reinsurers in handling underlying claims, including the practical realities of sharing responsibility for the resolution of those claims.

3. Interactive Workshop

This year the audience participation part of our program challenges you to find solutions to the thorny issues presented by our first two panels. We look forward to your input on improving the working relationship between cedents and reinsurers when difficult problems arise in underlying claims.

The symposium will conclude with remarks from David Brummond, the U.S. Treasury Department’s Senior Sanctions Advisor on OFAC who will discuss emerging regulatory trends and the growing role of the federal government as an insurance rulemaker. 

I hope to see many of you there!

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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.

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The Connecticut Supreme Court has breathed new life into Hartford's efforts to obtain reimbursement from its reinsurers for $1.15 billion that it paid to settle Western McArthur's asbestos claims.  In Hartford Acc. & Ind. Co. v. Ace-American Reinsurance Co., No. SC 17625 (Conn. December 25, 2007), the court declared that a Superior Court judge should not have granted summary judgment to Harford's reinsurers in light of apparent ambiguity with the respect to the terms of the subject treaties.  As a result, the case has been remanded to the trial court to consider extrinsic evidence of the parties' intent.

The ruling is somewhat surprising, as the same court had ruled six years ago in Metropolitan Life that the "cause" test requires that the number of "occurrences" in asbestos litigation be determined by reference to each individual claimant's injuries and not by reference to the insured's failure to warn.   In this case, however, the court distinguished Metropolitan as well as the similar reinsurance holding of the New York Court of Appeals in Travelers v. Lloyd's, finding that the "any one accident" common cause language in the Hartford treaties was "uniquely broad."  The court also appears to have been influenced by the extrinsic evidence presented by Hartford concerning the adoption of this language in the 1970s, wherein it asked for this "any one accident" language in lieu of an aggregate extension clause to permit it to aggregate losses occurring in more than one policy year.  Under the circumstances, the court found that Hartford's position that diverse injuries could be aggregated if they were of the same kind or "meaningfully related" was a "plausible" interpretation of the subject wordings.

Merry Christmas, Hartford!

 

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