In Bad Faith Cases Discovery of Reinsurance Information.
Most carriers reinsure.
It is a risk-spreading mechanism, designed to avoid a catastrophic loss falling on one carrier. The insured may discover unprivileged correspondence between the reinsurer and ceding insurer with respect to the claim if it discusses liability, exposure, the likelihood of an excess verdict, or coverage. This type of information has potential relevance for the same reasons reserves may be relevant in a bad faith case. Continue to next page, Discovery Regarding the Insurer's Financial Condition.