March 2008

Connecticut Supreme Court rules that common cause provision of reinsurance treaty is ambiguous with respect to the aggregation of claims 

In a recent decision, Hartford Accident and Indemnity Co. v Ace American Reinsurance Co., 266 Conn. 744, 934 A.2d 224 (Conn. 2007), the Connecticut Supreme Court considered the proper construction of the phrase “any one accident” as used reinsurance contracts between the plaintiffs, Hartford Accident and Indemnity Company and several of its affiliates (the Hartford), and the defendants, various reinsurers (the Reinsurers). The Supreme Court found a common cause provision in the contracts to be ambiguous for purposes of whether multiple asbestos claims could be aggregated as a single occurrence, and reversed the lower court’s decision granting summary judgment to Reinsurers.

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March 2008

Implementation of the Reinsurance Directive in the UK 

This is the latest in a series of consultation papers on the issue (see the September 2006 and March 2007 issues of the Kendall Freeman Insurance Review). The document focuses on the remaining changes to UK legislation which will be necessary to complete the implementation of the Directive. Most of these changes will be made to the Financial Services and Markets Act 2000 (FSMA) and related secondary legislation. The changes will impact on two key areas: passporting and portfolio transfers of reinsurance contracts under Part VII of FSMA.

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March 2008

Foreign (re)insurers doing business in the EEA: setting the record straight 

Prior to the Reinsurance Directive, there was no harmonised system of regulation of pure reinsurers in the European Economic Area (see Note). Member States, bearing in mind the GATS provisions, as noted below, could choose to what extent reinsurance was regulated in their own jurisdiction, resulting in inconsistencies for reinsurers throughout the EEA both in terms of authorisation requirements and prudential supervision requirements.

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March 2008

Landmark victory for reinsurers: New Jersey Supreme Court holds that IBNR claims do not qualify for participation in the final distribution of Integrity Insurance Company's estate

In a matter of first impression under New Jersey law that potentially impacts both the  insurance and reinsurance industry and policyholders of insolvent insurance companies, the New Jersey Supreme Court held that the final dividend plan proposed by the liquidator of Integrity Insurance Company should not be approved because it unlawfully allowed incurred but not reported (IBNR) claims to share in the insolvent  insurer’s estate (In the Matter of the Liquidation of Integrity Ins. Co. A-29-07 (NJ Dec 13, 2007)).

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THE TOPIC

FEBRUARY 2008

The term “catastrophe” in the property insurance industry denotes a natural or man-made disaster that is unusually severe. An event is designated a catastrophe by the industry when claims are expected to reach a certain dollar threshold, currently set at $25 million, and more than a certain number of policyholders and insurance companies are affected.

Catastrophe losses in 2005 totaled $61.2 billion from 24 disasters. The final tally for Hurricane Katrina losses is $41.1 billion stemming from 1.75 million claims. By contrast, losses for 2006, a year of little hurricane activity in the U.S., were $9.2 billion.

In-sure

This month's edition sees BIBA calling for a review of the regulation of comparison websites and the ABI opposing the Government's proposed reform on capital gains tax. CEIOPS publishes a set of new papers uin relation to QIS4 and the FSA announces plans to visit more than 11,000 firms during the next three years....

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