The Vesttoo scandal has spawned significant disputes between all types of contracting parties. In one dispute, the policyholder’s parent sued a reinsurance intermediary for breach of its reinsurance intermediary authorization agreement (“RIAA”).

Read more: Federal Appeals Court Affirms Dismissal of Most, But Not All, Claims Against Reinsurance Broker

In Porch.com v. Gallagher Re, Inc., No. 25-10489 (5th Cir. Apr. 2, 2026), the district court granted the intermediary’s motion to dismiss all claims of breach of contract arising out of the Vesttoo scandal. On appeal, the 5th Circuit affirmed dismissal of two of the claims, but allowed one claim of breach to proceed.

The parties entered into an RIAA and the intermediary procured a reinsurance contract. Security for the reinsurance contract was to be a letter of credit but it turned out to be a fraud. New insurance had to be put in place and substantial funds were lost. The insured sued the intermediary for breach of contract under several sections of the RIAA.

Section 5 of the RIAA required the intermediary to retain reinsurance records for 10 years. The circuit court affirmed dismissal of breach of this section because the claim that the intermediary did not obtain the letter of credit documents contradicted the plain meaning of “retained” in Section 5. Nor did Section 5 include an obligation to procure documents not in the intermediary’s possession.

Section 11 of the RIAA required the intermediary to comply with economic sanction laws. The court held that the intermediary did not breach this section by allegedly failing to comply with Texas insurance laws because this section only applied to economic sanctions.

Finally, the court held that there was enough to sustain a claim of breach of contract concerning Section 13 of the RIAA, which requires the intermediary to provide administrative services. The court found the section ambiguous and could be interpreted to encompass duties concerning the letter of credit. Because there were issues of fact as to whether it was customary for an intermediary to perform servicing duties concerning the letter of credit, the court reversed the district court and sustained this one claim against the intermediary.

Claims against reinsurance intermediaries are rare and we will see where this one goes. But when a major scandal occurs, no one in the contracting chain is immune from a lawsuit.