In coverage disputes, policyholders often seek communications between the insurance company and reinsurers to gain insights into the company’s views on the policyholder’s claims. Insurance companies generally resist production of reinsurance communications on various theories. In a recent case, the insurer invoked the “insurer-insured privilege.”
In Gibson v. Chubb National Insurance Co., No. 20-CV-1069 (N.D. Ill. Sep. 27, 2021), a coverage dispute arose concerning a fire loss. In the course of the litigation, the policyholder filed a motion to compel production of documents, including, among other things, reinsurance information. The insurer claimed insurer-insured privilege.
In granting the motion to compel, the court found that the insurer was not entitled to withhold communications with its reinsurer about the policyholder’s claim. The insurer attempted to bring the communications within an offshoot of the attorney-client privilege that related to the duty to defend the underlying claim. Illinois courts have held that communications between an insured and an insurer where the insurer has a duty to defend is privileged and that has been extended to agents of the insurer. The court rejected the argument that communications between the insurer and the reinsurer fell within the privilege. Here, the reinsurer had no duty to defend and the court directed the insurer to produce the communications.
This part of the opinion is short and sweet. There is more meat on the attorney-client privilege discussion but my focus here is on the reinsurance communications discussion.