LLR: Insurance & Reinsurance

Contract - Construction - Run-off “reinsurance” agreement - “Reinsurer” agreeing to “... pay and make good all claims, returns, reinsurance premiums and other outgoings” payable by “reinsured” - No “follow the settlements” clause - Whether “reinsurer” liable for all relevant payments which had been paid or settled honestly - Whether “payable” necessarily meant that claims must be legally payable under antecedent obligation deriving from original policies - Whether “reinsurer” precluded from challenging settlements effected by “reinsured” - Whether “reinsured”, if not legally liable to insured, could recover payments from “reinsurer” on proof that such payments constituted reasonable compromise on issue of liability - Whether “reinsured” had established requirements for rectification.

Insurance agents - State rules prohibiting rebates - Interpretation of articles 3(f), 5 (second paragraph) and 85(1) of the Treaty)

Lloyd’s - Members’ agents - Negligence - Duty of care owed to Names - .

Jurisdiction - French court - French company suing foreigner in French court - French Civil Code, article 14 - Action - Stay of action in French court - Lis alibi pendens - Connexite - Brussels Convention of September 27, 1968 articles 2, 6, 22.

Third party’s rights against insurers - Employer’s liability - Shipowners’ agents obtaining insurance - Policy issued in agents’ name - Damages awards made against shipowners in respect of fatal accidents to crew members - Shipowners wound up - Whether insurers liable to shipowners as undisclosed principals - Third Parties (Rights Against Insurers) Ordinance (Hong Kong), section 2.

Insolvency - Fraud - Reassured’s liquidator’s claims against reinsurers and broker - Whether relying on unenforceable contracts - Whether counterclaims for rescission available against liquidator - Whether cause of action against reinsurers for unjust enrichment to recoup premiums paid for coverage declared unenforceable was viable - Whether motions on part of foreign reinsurers who had not posted security pursuant to New York Insurance Law section 1213(c) should be denied.

Prize indemnity insurance - Non-disclosure and misrepresentation of material facts - Policy indemnifying insured if racing driver achieved a top three position in race series - Performance in previous races not disclosed to insurers - Whether insurers could repudiate liability under policy.

Prize indemnity insurance - Insurable interest - Necessity for.

Insolvency - Insurance - Professional indemnity - Professional liability insurance taken out by overseas assureds including corporate partners - Policies subscribed by authorised United Kingdom insurers - Insurers becoming insolvent - Application by assureds to Policyholders Protection Board - Whether partnership with corporate partners qualifying as “partnership... all of whom are individuals” - Whether person not legal holder of policy but with contingent claim qualifying as “policyholder” by becoming “person to whom... sum is due” on liquidation - Whether qualifying if claim later ceasing to be contingent - Policyholders Protection Act 1975 (c 75), sections 6(7)(b), 8(2) - Insurance Companies Act 1982 (c 50), section 96(1).

Wording - Construction - Proportional facultative obligatory reinsurance - Cover note providing “wording to be agreed”, “subject to all terms, clauses and conditions as the original and to follow the settlements and agreements of [reinsured] in all respects” - General portfolio of US and Canadian fire and casualty business - Whether reinsured made valid cession on sample contracts of insurance - Whether sample contracts outside scope of reinsurance - Meaning of “US and Canadian fire and casualty business” - Reinsurers’ liability in respect of amounts paid by reinsured to its assured or reassured in respect of costs/legal expenses.

Limitation - Lloyd’s litigation - Actions by names against underwriting agents - Defence of limitation pleaded - Reply by names alleging deliberate concealment - Application by underwriting agents to strike out reply - Wrongdoing followed by deliberate concealment - Whether ordinary time limit extended or excluded so that period ran from date when concealment was or ought to have been discovered.

Contract - Insurance - Existence of contract of insurance and parties thereto - Sufficiency of evidence to found proof that premium was in fact paid to broker.

Broker - Principal and agent - Liability of undisclosed principals - Distinction between non-disclosure of identity of principal and nondisclosure of fact of agency discussed - Whether broker was agent for principal whose identity was undisclosed and therefore was not personally liable for refund of premium.

Consideration - Whether total failure of consideration for payment of premium - Claims for money had and received on a total failure of consideration.

Marine insurance - Trading limits provision - Whether a warranty as to locality - Whether insured held covered even if in breach of warranty as to locality without notice to underwriters - Whether policy without geographical limits - Duty of good faith.

Classification of loss - Umbrella insurance agreement - “Completed operations hazard”.

Letter of credit - Reinsurance dispute - Alleged fraud - Application for injunction restraining beneficiary (reinsured) from drawing on letter of credit or restraining disposal of proceeds of letters of credit - Purported avoidance of contact by reinsurers - Whether prima facie case that beneficiary was acting fraudulently in claiming payment to which he knew he had no entitlement - Whether reinsurers had proprietary interest in monies that might be paid to reinsured under letters of credit.

Evidence - Interlocutory applications - Affidavit - Deponent relying on Department of Trade and Industry (DTI) Report - Application to strike out parts of reinsurers’ affidavits relying on DTI report.

Exclusion - Construction Insurance brokers’ errors and omissions - New York insurance brokers’ failure to account to reinsured for recoverables - Liability of London market errors and omissions underwriters - Whether broker was found liable for failing to produce financial records or for failing to forward and remit premiums and reinsurance recoverables - Whether exclusion applicable.

Sovereign immunity - Jurisdiction - United States - Attachment to enforce arbitration award - Whether retrocessionaire was agency or instrumentality of Argentinean government - Whether immune from prejudgment attachment - Whether court had subject matter and personal jurisdiction - Whether retrocession agreement provision regarding communications was “special arrangement” - US Foreign Sovereign Immunities Act 28 USC sections 1603(b), 1608, 1611(b), 1610(d) - Convention on Recognition and Enforcement of Arbitration Awards.

Definition of loss - Any one event - Errors and omissions insurance - Negligence by run-off underwriter - Liability of reinsurers of errors and omissions insurers - Whether state of affairs or failure to do something was an “event” - Meaning of “entire loss”.

Non-disclosure - “Material circumstance” - “Judgment of a prudent insurer” - Applicable test - Understatement of loss records - Renewal of casualty excess of loss treaty for 1982 - Earlier years’ records - Disclosure of losses of US$235,768 - True losses of US$468,168 - Whether additional losses material to contract - Whether establishment of material nondisclosure sufficient to enable insurer to avoid liability - Marine Insurance Act 1906 sections 17, 18.

Reinsurance contract - Construction - Earthquake - Reinsurance for both fire and earthquake risks in same amount - Statutory liability of New Zealand Earthquake and War Damage Commission for indemnity portion of earthquake claim - Whether reinsurance contract for excess of earthquake indemnity only - Earthquake and War Damage Act 1944 - Whether court should order rectification of contract documents - Whether reinsurer entitled to recovery of moneys paid under mistake of law.

Lloyd’s - Managing agents - Liability of managing agents to direct and indirect names - Whether law of tort imposed any duty of care upon managing agents not to cause purely economic loss to names - Effect of “absolute discretion” conferred upon managing agents under underwriting agency agreement - Whether managing agents owed names a fiduciary duty.

Lloyd’s litigation - Agency agreements - Construction - Names’ actions against members’ agents - Undertaking by names to pay “all liabilities and outgoings” - Whether names’ claims for loss and damage related directly to and were founded upon the cash requirements made upon names for purposes of “underwriting business” - Whether name had no cause of action and was precluded from bringing proceedings in respect of claims for breach of contract or duty - Whether claims arising from negligent underwriting were related to cash calls made against names.

Lloyd’s - United States - New York - Foreign syndicate of underwriters - Whether syndicate subject to suit of New York courts as result of American Trust Fund on deposit at New York bank.

Jurisdiction - New York - Lloyd’s syndicate - Whether Lloyd’s syndicate subject to suit in New York courts on basis of American Trust Fund on deposit at New York bank, into which portion of underwriters’ premium income derived from underwriting of New York risks was deposited, and without which, under New York insurance law, New York licensed insurance brokers and companies could not do business with syndicate.

Arbitration - United States - New York - Reinsurance disputes litigated in New York courts - Motion by defendants 2% years after action filed to compel arbitration - Whether plaintiffs would be prejudiced.

Procedure - United States (Illinois) Interrogatories in reinsurance dispute - Whether plaintiff entitled to obtain copies of reinsurance policies related to policies defendant issued - Whether discovery related to reinsurance would be permitted prior to holding that contract language was ambiguous - Whether interrogatory asking for all documents related to reinsurance would be limited - Whether plaintiff entitled to information about insurance claims of other insureds.

Arbitration - Award - Functus officio - Whether arbitrators exceeded their power when they issued second award - Circumstances under which an arbitral award may be corrected because of an erroneous assumption of fact.

Liquidation - Reinsurance company - New York - Approval of Plan of Reorganisation.

Jurisdiction - United States - New York - Offshore defendants - Whether liquidator had established personal jurisdiction over offshore defendants by preponderance of evidence under NYCPLR section 301(a)(1), and exercise of personal jurisdiction over offshore defendants comported with requirements of Due Process Clause.

Jurisdiction - United States - Massachusetts - Insolvency - Claim by liquidator of insolvent reinsured against foreign and domestic reinsurers - Action commenced in State court by liquidator - Action transferred to federal court by reinsurers pursuant to US statute of accession to Convention on the Recognition and Enforcement of Arbitration Awards - Whether federal courts should abstain from jurisdiction.

Policy - Construction - Health maintenance organisations - Meaning of “unaffiliated provider” - Whether circuit court erred in interpreting term “unaffiliated provider” in health maintenance organization (HMO) insolvency endorsements as providers without contracts.

Misrepresentation - Contract - Procurement of reinsurance.

Marine insurance - Damage to cargo - Claim against sellers of cargo - Whether cargo owners had established that bad packing caused transit damage to machinery where goods arrived in damaged state caused by machines impacting against each other in container - Whether insurance had become invalidated because seller’s employee had recklessly sought to persuade underwriters that machinery had been properly packed - Whether making of fraudulent or reckless material misrepresentations by insured to an insurer in support of a claim under the insurance amounts to a failure to observe the duty of the utmost good faith - Whether making of negligent as opposed to fraudulent or reckless misrepresentations in support of a claim entitled insurers to repudiate liability on the basis of a failure to exercise utmost good faith.

United States - Procedure - Liquidation - Application by plaintiff liquidators of Bermuda based mutual for interlocutory appeal and final judgment - Whether plaintiff had demonstrated substantial grounds for difference of opinion with respect to district court’s determinations of law - Whether immediate interlocutory appeal was likely to materially advance ultimate termination of litigation.

Arbitration - Arbitrator - Appointment - Delay - Effect of three-day delay in appointment of arbitator - Whether district court erred - Whether breach was “material” under Illinois law - Factors to consider.

Liquidation - Bermuda - Illegality - Reinsurance contracts, to which Bermuda company in liquidation was party, governed by English law, prohibited by statute and illegal and void ab initio - Whether unenforceability of reinsurance contracts illegal under proper law contrary to Bermuda public policy - Whether law offended Bermuda’s public policy notion of morality in relation to essential insurance interests of community - Whether enforcing illegal reinsurance contracts in Bermuda by admission to proof would risk international comity being jeopardised.

United States - Procedure - Discovery - Reinsurance dispute - Retrocession information, deposition of executive, scope of depositions, privileged information.

Arbitrator - Award - Review - Whether district court erred in concluding arbitrators exceeded their authority in awarding refund under reinsurance contracts - Courts’ jurisdiction to review arbitration awards - Whether contracts empowered arbitrators to use equity and customary industry practices to decide all questions and issues - Whether arbitrators violated essence of contracts by first considering customary industry practices and then using equitable considerations in resolving dispute on which contract was silent - Whether arbitrators acted in manifest disregard of law.

Insurance - Marine - Unvalued or open policy - Loss of vessel under tow - Proper approach to valuation - Market value of sale for scrap in India - Less proportion of joint towing contract to get there - held: Proper valuation.

Insurance - Marine - Loss of vessel under tow - Whether towing charges constitute a “disbursement to make the ship fit for the voyage or adventure” - held: (by maj) It is.

Arbitration - Arbitration clause - Enforceability - Liquidation - Whether clause enforceable against liquidator.

Insurance - New York - Alien insurer - Posting of security a condition precedent to filing pleading - Effect of financial weakness by alien insurer.

Excess insurance - Claim - Notice - Whether second layer excess insurers were reinsurers - Whether second layer excess insurers entitled to summary judgment because timely notice of claim had not been given by insured as required by policy.

Arbitration - Award - Whether panel acted within scope of its authority - Interpretation of contractual provision requiring posting of security - Whether panel had to meet preliminary injunction standard in awarding interim security - Whether party had full hearing on issue of interim order.

United States - Procedure - Discovery - Immunity - Work product rule - Whether FRCP Rule 26(b)(3) granted immunity from discovery - Tests.

Arbitration - Arbitration clause - Construction - Pool - Trust established to fund Outstanding Loss Reserves and Unearned Premium Reserves of Commuting Syndicate Members - Dispute under trust - Whether arbitration should be compelled.

Insolvency - Setoff - Liquidator of reinsured disallowing setoff by reinsurer - Court decision affirming liquidator - Dispute settled - Decision overruled by appellate court - Whether reinsurer entitled to defend action.

Procedure - New York - Alien reinsurer - Pre-answer security - New York Insurance Law - Whether section 1213 of New York Insurance Law applied to reinsurance disputes or transactions - Whether order requiring defendant to post pre-answer security would constitute taking without due process.

Conflict of laws - Jurisdiction - Anti-suit injunction - Action in New York on same facts as action in Australia - Whether defendant in New York entitled to injunction in Australian courts against New York action.

Australia - Practice and procedure - Anti-suit injunction - Applicants suing New York law firm “S” arising out of same facts as those which had given rise to proceedings in Australia - Respondents joined S as cross respondents in Australian proceedings claiming contribution or indemnity - Motion by S for dismissal or stay of New York action on ground of forum non conveniens - Motion in New York failing at first instance and on appeal - Application by S to Australian Court for injunction restraining applicants from pursuing action against it in New York - S having stated that if it failed it would wish to cross-claim in New York against respondents and another cross respondent to proceedings - Injunction sought restraining S from impleading those parties in New York - Basis of jurisdiction to grant anti-suit relief - Factors relevant to exercise of discretion - Scope of “matter” over which court had jurisdiction.

Trust - Statutory trust - Constructive trust - Whether bank liable to third party as constructive trustee - Insurance agent having financial difficulties and using trust funds to cover its own overdraft - Whether bank knew monies were trust funds - Bank benefiting from agent’s breach of trust - Obligation on bank to make inquiry - Insurance Act, RSA 1980, sect 124(1) - Prejudgment interest - Judgment Interest Act SA 1984.