Proving the existence of an old reinsurance contract, especially a facultative certificate, is a fact-intensive endeavor. Time and time again, long-tail losses, like asbestos losses, result in insurance companies uncovering “evidence” of long-lost reinsurance certificates. Whether that evidence is sufficient to “prove” the contract is often a question of fact.
In Pohjola Insurance Ltd. v. Continental Insurance Co., No. 1-24-2284, 2026 IL App (1st) 242294-U (IL App Mar. 11, 2026) (Not Precedent), summary judgment was granted to the reinsurer and against the cedent, with the motion court finding that the cedent’s evidence of reinsurance was not authenticated and that the evidence merely showed that the parties contemplated entering into a reinsurance contract. On appeal, the Illinois Appeals court reversed.
The case arose out of asbestos losses. The cedent, decades after resolving the asbestos coverage dispute with the underlying insured, located secondary evidence that its policies had been reinsured, including the face sheet of a facultative certificate, reinsurance layoff and coding sheets, and correspondence discussing reinsurance premiums. After billing the reinsurer, the reinsurer rejected the billing claiming that there was no reinsurance contract and argued late notice.
On appeal, the court found that the facts, including the secondary evidence of the facultative certificate, show that more than one reasonable conclusion could be drawn as to whether there was or was not a binding reinsurance contract. Thus, said the court, summary judgment was not appropriate.
The court also addressed the reinsurer’s late notice defense. The court found that New York law applied and, therefore, the reinsurer had to prove prejudice in the form of tangible economic injury. The court rejected the reinsurer’s argument that because the reinsurance was on a 100% basis, that it should be treated as a direct insurer and not a reinsurer. The court found that the reinsurer failed to offer evidence of prejudice, but that the existence of genuine issues of material fact precluded summary judgment.
