Source: https://loreelawfirm.com/blog/category/follow-the-settlementsfollow-the-fortunes/
Timestamp: 2019-04-20 18:37:38+00:00

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Our friend, colleague and fellow Commercial and Industry Arbitration and Mediation Group member, John DeGroote, has written and published in his Settlement Perspectives blog an excellent article offering some very practical and sound guidance to corporate policyholders who are confronted with litigation that may fall within the scope of their liability insurance, and who desire to increase the odds of securing coverage. John, who is President, Chief Legal Officer and Secretary of management and technology consulting firm BearingPoint, Inc. (formerly KPMG Consulting), was kind enough to seek our input on the article. It is entitled Insurance Coverage: 4 Rules and 10 Tips for Policyholders, and features a link to a longer, more detailed article John co-wrote on the same subject for an Association of Corporate Counsel (“ACC”) publication.
When I read John’s draft the first thing that struck me was that the rules and tips he offers are, for all intents and purposes, applicable to cedents pursuing reinsurance recoveries. He stresses, among other things, the importance of honesty, good faith, open communication and not colluding with the claimant in an effort to obtain coverage. These attributes are ones to which diligent, ceded claims personnel should aspire in their dealings with their company’s reinsurers, because they tend to increase the odds of achieving a successful recovery and avoiding time-consuming and expensive reinsurance disputes (all other things being equal).
You would be surprised how frequently reinsurers contend that the carrier colluded with the policyholder in direct insurance coverage litigation. If the reinsurer can establish collusion concerning the fact, amount or allocation of coverage, or if the reinsurer otherwise shows that the carrier acted in bad faith, then the reinsurer will usually be relieved of liability for the claim. Like policyholders making direct insurance claims, carriers making reinsurance claims need to avoid even the appearance of collusion or bad faith, and following rules analogous to yours helps them do that.
Whether you happen to be a corporate or individual policyholder, or a cedent wishing to increase the odds of successfully collecting from reinsurers, John’s fine article comes highly recommended. In fact if you are at all interested in settlement and ADR, we highly recommend that you follow Settlement Perspectives. John writes high-quality, insightful and practical articles on a variety of pertinent topics. Who could ask for more?
House of Lords Hands Down Landmark Reinsurance Decision: Lexington Insurance Co. v. AGF Insurance Ltd.
August 22nd, 2009 Asbestos-Related Claims, Environmental Contamination Claims, Follow-the-Settlements/Follow-the Fortunes, House of Lords, Reinsurance Allocation, Reinsurance Claims Comments Off on House of Lords Hands Down Landmark Reinsurance Decision: Lexington Insurance Co. v. AGF Insurance Ltd.
In Part I we discussed the controversy surrounding the House of Lords decision in Lexington Insurance Co. v. AGF Insurance Co.  UKHL 40. The House ruled that two proportional facultative reinsurers were not obligated to indemnify the cedent for their share of the entire amount of a judgment a Washington State court rendered against the cedent in an environmental coverage action. The judgment, which was based on Pennsylvania law, rendered the cedent liable under the policy jointly and severally for property damage caused by environmental contamination that occurred before, during and after the three-year policy period. The House ruled that the reinsurers could be held liable only for their respective shares of the loss that occurred during the three-year term of the reinsurance contract (which was concurrent with that of the cedent’s policy), not their shares of the total amount of loss for which the Washington judgment held the cedent liable under the reinsured policy.
August 18th, 2009 Asbestos-Related Claims, Environmental Contamination Claims, Follow-the-Settlements/Follow-the Fortunes, House of Lords, Reinsurance Allocation, Reinsurance Claims Comments Off on House of Lords Hands Down Landmark Reinsurance Decision: Lexington Insurance Co. v. AGF Insurance Ltd.
Effective October 1, 2009 the House of Lords will be replaced by the Supreme Court of the United Kingdom (more information here). In what may be among its last official acts, on July 30, 2009 the House decided an important reinsurance case concerning the scope of a reinsurer’s indemnity obligation to a U.S. cedent under English law. See Lexington Insurance Co. v. AGF Insurance Co.  UKHL 40. The reinsurance contract was back-to-back with the reinsured policy in all but one respect: it was governed by English law, while the insurance policy was, in the event of coverage litigation, potentially subject to the laws of any number of U.S. jurisdictions, depending on venue, applicable choice of law rules and other considerations. Relying on a long-line of English law precedent, and distinguishing other precedent, the House ruled that a proportional facultative reinsurer was not obligated to indemnify the cedent for the reinsurer’s share of the entire amount of a judgment a state court in Washington rendered against the cedent. The judgment resulted from a Washington Supreme Court decision which, applying Pennsylvania law, ruled that the cedent was jointly and severally liable under its policy for property damage caused by environmental contamination that occurred before, during and after the cedent’s three-year policy period. The House said that, judgment or no judgment, the reinsurer agreed to reinsure only loss or damage occurring during the coterminous, three-year period of the reinsurance contract, and the reinsurer’s obligation was limited to its share of that loss.
The House’s decision is likely to be controversial. In this Part I of a two-part post, we shall discuss the controversy and seek to allay it a bit. In Part II we’ll walk the reader through that reasoning and offer some parting comments.

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