Parties routinely seek reinsurance information in insurance coverage cases and the courts routinely allow those requests to go forward. Yes, each case is different and each request is different and the reinsurance information may be different as well so drawing a general conclusion is fraught with danger. Nevertheless, two recent cases continue the trend of requiring production of reinsurance information.
In Williams International Co., LCC v. Zurich American Insurance Co., No. 4:20-cv-13277 (E.D. Mich. Mar. 7, 2022), the policyholder moved to compel production of documents. Among the documents was reinsurance agreements. In granting the motion in part, the court held that the reinsurance agreements were covered by Federal Rule of Civil Procedure 26(a)(1)(A)(iv) and should have been produced as part of the insurance company’s initial disclosures (requiring disclosure of “any insurance agreement under which an insurance business may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for payments made to satisfy the judgment.” The court noted, by citation, that the rule is absolute and no showing of relevance is necessary. Accordingly, the court ordered the insurance company to produce any reinsurance agreement, whether treaty or facultative, along with any declarations sheets.
Here’s the problem with reinsurance before the courts. Not many reinsurance agreements have declarations sheets. But, nevertheless, they are ordered produced if they exist. The court overruled the insurance company’s objections based on proprietary nature or confidentiality, referring instead to the existing protective order in the case.
Not all was lost for the insurance company, however. The policyholder’s request for “[a]ll documents [and/or] communications concerning” the reinsurance was rejected on vagueness, relevance and ambiguity grounds. In other words, you can ask for relevant reinsurance agreements but if you ask for other documents the request has to be more specific and relevant to the underlying dispute.
In Computer Sciences Corp. v. Endurance Risk Solutions Insurance Co., No. 1:20-cv-01580-MKV (S.D.N.Y. Mar. 10, 2022), my friend Judge Vyskocil, an insurance and reinsurance expert from her days at Simpson Thacher, ruled, among other things, that the insurance company’s communications with its reinsurers about the disputed claim were relevant and must be produced. Notably, the policyholder asked for the reinsurance agreements, which the insurer said had no relevance where there was no issue as to the insurer’s ability to satisfy any judgment. The court focused instead on reinsurance communications involving the disputed claim and ordered those communications produced.
These cases are part of a continuing trend where the courts have allowed reinsurance information to be produced in insurance coverage disputes.