New Arbitrability Decision from the Supreme Court

US Supreme Court Building Detail Close-up

A new arbitration decision was handed down by the U.S. Supreme Court on January 8, 2019.  My colleagues in our labor and employment practice swiftly blogged about the new decision so I won’t repeat their cogent analysis. The case has nothing to do with insurance or reinsurance. But the principles set forth by Justice Kavanaugh in his first opinion (unanimous at that) are relevant to insurance and reinsurance arbitrations because most insurance and reinsurance arbitrations come within the Federal Arbitration Act (“FAA”).

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Arbitration Awards and Confidentiality Revisited

Confidential Files

In reinsurance arbitrations, most parties agree to confidentiality and enter into a formal confidentiality order.  The confidentiality order typically applies to the final award as well as all materials generated in the arbitration.  Some insurance and reinsurance agreements have confidentiality provisions that lead to the same result.  The ARIAS-U.S. Rules for U.S. Insurance & Reinsurance Disputes presumes confidentiality (7.1 and 7.2) and ARIAS has a model confidentiality agreement.

In two previous blog posts, we discussed some of the issues with confidentiality in arbitration and whether arbitration awards and materials should be sealed when there is a petition to vacate or confirm the award.  In a recent case outside of the insurance and reinsurance world, a Missouri federal court addressed a similar question.

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As the Commercial Market Expands Government Terrorism Mechanisms Pull Back

In response to the terrorist attacks of the 2000s, a number of governments established insurance-like mechanisms to address the catastrophic effects of a terrorist attack.  One of the early state-backed facilities is the UK’s Pool Reinsurance Company, Ltd. (“Pool Re”), which was actually set up in the 1990s to address events sparked by the unrest in Northern Ireland.

The Pool Re scheme, which is explained on its website, is somewhat similar to the government-backed legislative mechanism in the US, the Terrorism Risk Insurance Program, often called by its original acronym, TRIA.  With the expansion of the commercial insurance and reinsurance market into terrorism coverage, the US and the UK have modified their programs.  This post discusses a new development at Pool Re, which reflects the growing ability of the commercial market to handle terrorism risks.

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LPTs and Existing Reinsurance Relationships

Elegant couple holding arms

Insurers have been using loss portfolio transfers (“LPTs”) for decades for a host of reasons.  An LPT is a great way to move a legacy book of business off the balance sheet.  What is often forgotten is the interplay between the LPT and existing reinsurance contracts.  This is especially so when the LPT is more retrocessional than reinsurance.

 

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Ninth Circuit Sends Conflict Between Representations of Authorized Insurer Agent and Certificate of Insurance to Washington Supreme Court

Industrial, Building, Antennas

Certificates of insurance are ubiquitous in construction projects and in many other industries.  But, as most jurisdictions hold, a certificate of insurance is not the functional equivalent of the insurance policy and cannot be used to amend, extend or alter coverage.  It is merely a piece of paper informing the recipients that insurance has been obtained.  But what happens when an authorized agent of an insurance company makes a representation in a certificate of insurance about whether a party is an additional insured and, at the same time, the certificate disclaims its authority and ability to expand coverage?  That is the question that the Ninth Circuit had before it and has certified to the Washington Supreme Court.

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No Coverage for a Claim of Impairment of Goodwill and Reputation Under Defamation Endorsement

Cheers, happy hour, networking

When a business gets sued it looks to its various insurance policies for coverage and a defense.  But sometimes the insurance policy purchased does not fit the coverage sought.  That was the case in the Seventh Circuit where a restaurant company sought coverage for a claim brought by a television provider for damages when the restaurant used a non-commercial subscription to show programming on screens in the restaurant.

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Advertising Injury and Offering For Sale

Whether an activity is advertising such that it comes within the advertising injury coverage grant of a commercial general liability (CGL) policy is a difficult and complicated question.  Maybe it shouldn’t be, but the coverage grant combined with exclusions to avoid coverage for intellectual property infringement claims and coverage write-backs within exclusions makes it complicated.

It certainly has vexed the courts.  In the face of this confusion, the U.S. Court of Appeals for the Second Circuit has held that an offering for sale may be advertising and that a duty to defend arises.

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Windstorm, Storm Surge, Flood Exclusion and Anti-Concurrent Causation Confusion

Back in October, the U.S. Court of Appeals for the Second Circuit issued a Summary Order (no precedential effect) in a Hurricane Sandy storm surge coverage dispute.  The court reversed summary judgment in favor of the insurer and remanded the case back to the district court to assess whether an endorsement’s anti-concurrent causation clause conflicts with or creates an ambiguity concerning a flood exclusion.  The struggle to articulate coverage or non-coverage for storm surge continues.

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Coverage for Government Investigations and Warranty of No Known Claims

Obtaining insurance coverage for a government investigation is often complicated by the type of investigation and the available coverage.  Most policies that cover aspects of government investigations–directors and officers liability policies or errors and omissions policies–are written on a claims-made form and exclude claims that relate back to prior or pending claims.  Very often the insurance company asks for a signed warranty that the insured and its officers are unaware of any actions that might result in a claim during the policy period.

Recently, the United States Court of Appeals for the Second Circuit issued a Summary Order (non-precedential) addressing an attempt to obtain coverage for a government investigation from a new third layer excess insurer.

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New Case on Consolidation in Reinsurance Arbitrations

It’s pretty clear in most jurisdictions that the question of whether disputes under multiple reinsurance contracts should be consolidated is a question for the arbitrators and not the court.  What’s less clear is how the parties get an arbitration panel in place to address the consolidation issue. A California federal court recently addressed this issue. Continue Reading

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