Policyholders regularly ask for discovery of reinsurance information. Courts are regularly allowing it, but there are limitations as you will see from this Louisiana federal court decision from earlier in 2024.
In Clinic Reality, LLC. v. Lexington Insurance Co., No. 2:22-CV-05724 (W.D. La. Mar. 5, 2024), the court addressed two motions to compel document discovery and deposition questions by the policyholder in this coverage and bad faith action arising out of hurricane damages. Limiting the discussion to reinsurance, the policyholder sought production of information about reinsurance that might have been applicable to the policyholder’s claim. The policyholder also sought to question the insurer’s corporate witness about the applicability of reinsurance as well.
As to the documents/interrogatories, the insurer contended that there was no reinsurance applicable to the policyholder’s claims. The court ordered the insurer to formally amend its responses to indicate that there was no applicable reinsurance if it had not done so already. Otherwise, the court held that the information was relevant at least for discovery purposes and directed the insurer to produce the information without limitation on relevance or proportionality and to provide a privilege log for any redacted information. Thus, by formally amending its discovery responses the insurer would not be compelled that which did not exist.
As to the deposition, the court overruled the insurer’s objection to the deposition questions but limited the scope of questioning to reinsurance available for the policyholder’s claims. The court held that it was appropriate that the insurer should be able to produce a deponent who can answer these and related questions about reinsurance applicable for the policyholder’s claims.
As in the case of the documents and interrogatories, if the witness testifies that there is no applicable reinsurance to these claims, that should end the inquiry. Notably, in a ruling on the insurer’s motion in limine a month later, the court granted the motion in limine on reinsurance noting that:
[The insurer] informs the Court that there is no reinsurance, facultative and/or treaty that applies to [the policyholder]’s Hurricane Laura and/or Delta claims. [The policyholder] agrees that [the insurer] has not produced any information about reinsurance but reserves its right to examine any reinsurance information should it be discovered.
