Commentary on insurance and reinsurance disputes and related issues and the website of Schiffer Law & Consulting PLLC
Author: Larry P. Schiffer, Schiffer Law & Consulting PLLC
After 38-years with boutique and global law firms, Larry P. Schiffer launched an independent legal and consulting practice, Schiffer Law & Consulting PLLC, where he provides services as a lawyer, counselor, consultant, mediator, arbitrator and expert witness. He practices commercial, insurance, and reinsurance litigation, arbitration, and mediation. He provides advice on a wide variety of insurance and reinsurance issues, including claims and disputes, policy wording analysis and drafting, insurance insolvency issues, due diligence for transactions and have insurance or reinsurance components, insurance and reinsurance education and other advice. He is available to appear for clients outside of NY at mediations and conferences as needed on a per diem basis. He is active in legal and trade associations where he has held various leadership positions. He has lectured and has been widely published on reinsurance and other insurance topics. He serves as an Expert Commentator on reinsurance for IRMI.com and co-authored the chapter on reinsurance in the New York State Bar Association’s Insurance Law Practice treatise. He is the editor of the ARIAS•U.S. Quarterly. Mr. Schiffer received his J.D. from Albany Law School, where he graduated cum laude, was a member of the Albany Law Review and a member of the Justinian Society, and received his B.A. magna cum laude from Brooklyn College of the City University of New York. He was admitted to practice in New York in 1980.
Let me know your favorite post. Tell your friends and colleagues to register to receive new blog posts. Most Schiffer on Re-Insurance Blog Posts are available as Podcasts on Spotify via Anchor. Thank you for reading and I hope you continue to read in 2023. I am happy to entertain topic ideas. I hope you find my blog helpful. Let us all have a happy and safe and healthy 2023.
Arbitrators have the power to issue subpoenas when necessary. Those subpoenas may be enforced in court. In reinsurance arbitrations, subpoenas are issued relatively rarely, but they do happen. The law surrounding subpoenas in arbitrations was in flux some years ago but since has normalized. Yet occasionally, disputes over the validity and enforceability of arbitral subpoenas arise as it did in a recent case involving a reinsurance dispute.
With the proliferation of runoff companies, which either take over distressed reinsurers or absorb legacy reinsurance obligations, comes claims by insureds and cedents against those companies and their affiliated administrators for various alleged offenses. For example, claims of tortious interference with contract have been brought against a number of runoff entities and their affiliates.
But claims of tortious interference are very difficult to sustain. In a recent case, an Illinois federal court dismissed tortious interference claims for the second time.
Legacy reinsurance liabilities against certain non-US reinsurers that have gone into insolvency or have been absorbed by non-US governments remain an issue for many US ceding companies. Some US ceding companies have fought long and hard to win arbitrations, enter judgments and then try to enforce those judgments against the non-US reinsurers or their governments. Success in doing this has been up and down. A recent case goes into great detail in addressing one cedent’s journey to enforce judgments against Argentina.
It is quite common to have a transaction where a company essentially takes over another company and reinsures its obligations 100%. Several years later, the acquiring reinsurer may sell the acquired ceding company as a “clean shell.” Of course, the new acquiring company that buys the shell wants the original 100% reinsurance agreement to remain in force. After 10 years or more, sometimes things go awry.
In certain relationships, a non-signatory to a contract with an arbitration clause may be compelled to arbitrate because of the benefits the non-signatory gains from the contract. But compelling a non-signatory to arbitrate is not an easy task. In a recent case, a reinsurer sought to compel insured school districts to arbitrate their claims, which the school districts brought against both the cedent risk management cooperative and the reinsurer when certain claims were not paid.
Back in September 2022, my latest Reinsurance Expert Commentary was posted on IRMI.com. You can access the Commentary by clicking here. This is an update on the same subject from several years earlier.
Who decides whether a contractual time limitation in a reinsurance contract on when an arbitration can be brought applies to bar arbitration? In a recent case, the Sixth Circuit Court of Appeals affirmed a district court’s decision sending the matter to arbitration for the arbitrators to decide on whether or how the limitation provision will be applied.
Courts have long held that a cedent’s settlement allocation decisions fall within the follow-the-fortunes/follow-the-settlements doctrines. Nevertheless, with the many ways settlements and claims can be allocated to policies and then ceded to applicable reinsurance contracts there are bound to be disagreements that arise. In a recent case involving a cedent’s allocation of asbestos settlements to excess polices, the reinsurer raised various issues why it did not have to respond to the portion of the settlement billed to it, including that the cedent failed to exhaust the underlying excess policies. The case worked its way to the Second Circuit Court of Appeals, no stranger to follow-the-settlements and allocation decisions.