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Reinsurance Powerpoint
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Reinsurance Powerpoint

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Summary of Law on Follow-the-Fortunes doctrine as applied in Mass Tort context between insurers and reinsurers

Summary of Law on Follow-the-Fortunes doctrine as applied in Mass Tort context between insurers and reinsurers

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  • 1. The“ llo -the rtune ” c Fo w -Fo s Do trinein Ins r/Re ure Dis ute ure ins r p s B B b Re m nd y o d o W mM n illia s ulle rre m nd w m m n.c m d o @ illia s ulle o 84 3 49 0 -78 -6 3
  • 2. Ove w rvie » The“ llo -the Fo w - » De ns s fe e Fortune ” c s Do trine » Ap lic tio in M s p a n as » De lo m nt o ve p e f To C nte rt o xt Do trine c » C ns e tio fo o id ra ns r » Ke Te s y rm Ins rs ins rs ure /Re ure » B s fo a is r Ap lic tio p a n » W t isg ve d b ha o rne y Do trine c
  • 3. The“ llo -the rtune ” c Fo w -Fo s Do trine » The“ llo -the rtune ” c Fo w -Fo s Do trine im o e o there ure thed p ss n ins r uty: ›To ind m theins r fo p ym nts e nify ure r a e ins r m ke p ua to alo ss ttle e ure a s urs nt s e m nt und r itso n p lic a lo thes ttle e e w o y s ng e m nt is ›M d in Go d Fa ae o ith ›Re s na le ao b ›Arg b w ua ly ithin thete so thep lic rm f o y
  • 4. P o eo TheFo w - urp s f llo -the Fo rtune Do trine s c » Them in ra na o thed c a tio le f o trineis ›“ fo te theg a o m xim c ve g to s r o ls f a um o ra e a s ttle e a to p ve c urts nd e m nt nd re nt o , thro h de novo review of the cedent’s ug decision-making process, from undermining the foundation of the cedent/ reinsurer relationship” ›Travelers Ins. Co. v. Gerling, 4 F. 3 18 19 d 1, 18 ( 2 . C 2 0 ) 8 d ir. 0 5
  • 5. P o eo TheFo w - urp s f llo -the Fortune Do trine s c » P o e “ re ure c nno s c nd urp s : A ins r a t e o g s theg o fa lia ility ue s o d ith b d te ina nsm d b itsre ure , o e rm tio ae y ins d r theins dsg o fa d c io to ure ’ o d ith e is n w ived fe e to w h it m y b a e ns s hic a e entitle ” d ›Christiana General Ins. v. Great A merican Ins. 9 F. 2 2 9 2 0(2 . C 19 2 79 d 6 , 8 d ir. 9 )
  • 6. P o eo the“ llo the urp s f Fo w Fortune ” c s Do trine » “ Do trinep c e w s ful The c re lud s a te re a n b are ure o d fe e to litig tio y ins r f e ns s und rlyingp lic c ve g in c s s e o y o ra e a e w rethec d ins r ha in g o he e ing ure s o d fa p idas ttle e ith a e m nt” ›National Union Ins. v. A merican Re-Ins. Co. 441 F. Supp. 2d. 646, 650 (S.D.N.Y 2006)
  • 7. P o eo the“ llo -the urp s f Fo w - Fortune ” c s Do trine » Thep o eisto p s rvethe urp s re e ins r/re ure re tio hip a ure ins r la ns nd p ve thede novo re wo c im re nt vie f la s d te ina nsb re ure a the b e rm tio y ins rs nd re y m keins rsle slike to s ttle a ure s ly e und rlyingc ve g c im e o ra e la s ›Int’l Surplus Lines v. Certain Lloyds Underwriters 8 8F. S p 9 (N.D. Ohio 6 up . 17 19 2 9)
  • 8. Glo s ry o Ke Te s s a f y rm “ rim ry Ins nc ”Ins nc tha P a ura e : ura e t p vid stheinitia la r o c ve g ; ro e l ye f o ra e “ e sIns nc ”Ins nc tha c ve Exc s ura e : ura e t o rs lo s sw n p a la r o c ve g is s e he rim ry ye f o ra e e us d xha te ; “ ins nc ”Ins nc fo lo s stha Re ura e : ura e r s e t p a o e e sins r inc rim ry r xc s ure urs
  • 9. Glo s ry o Ke Te s s a f y rm » “ e e / “ e ingIns r”P a o C d nt” C d ure : rim ry r Exc s C rrie tha “e e ” k to e s a r t c d s ris re ure ins r » “ c tiveRe ura e : Re ura e Fa ulta ins nc ” ins nc to c ve s e ificp lic s o r pc o ie » “ a Re ura e : Re ura eto Tre ty ins nc ” ins nc c ve a p lic sfa o r ll o ie llingw ithin a s e ifie c s p c d la s
  • 10. Glo s ry o Ke Te s s a f y rm » “ c tio : Them nne in w h a Allo a n” a r hic n ins r a c te alo sa ro sm le ure llo a s s c s ultip la rs ye rso ins nc c ve g ye / a f ura e o ra e » “ ingB thtub Allo a n”M tho o Ris a c tio : e d f a c tio w relo sisa c te e ua llo a n he s llo a d q lly a ro sa p lic sa s m le l o r c s ll o ie t a e ve ve d fine tim p rio . e d e e d
  • 11. Glo s ry o Te s s a f rm » “ a s tio Trig e : M nne to M nife ta n g r” a r id ntify d teo lo sb s do e a f s ae n m nife ta n o p ic l injury o a s tio f hys a r p p rty d m g ro e a a e »“oC ntinuo Trig e : M nne to us g r” a r id ntify d teo lo sb s do initia e a f s ae n l e o urec ntinuingthro h e o xp s o ug nd f e o ure xp s
  • 12. W n isthe“ llo -the he Fo w - Fortune ” c s Do trineAp lie p d » C ntra tua : “ lo ss ttle e b o c l All s e m nts y [ins r] p vid dtha the a w ure ro e t y re ithin thete sa c nd nso this rm nd o itio f C rtific teo Re ura es ll b e a f ins nc ha e b ingo the[re ure Thelia ility o ind n ins r] b f the[re ure s ll fo wtha o the ins r] ha llo t f [ins r]. . . .” ure ›GerlingP lic o y
  • 13. W n isthe“ llo -the he Fo w - Fortune ” c s Do trineAp lie p d » C to a Us g : In thea s nc o a us m nd a e be e f c ntra tua p vis n, theins r m y o c l ro io ure a p s nt e e etha the“ llo -the re e vid nc t fo w - fortune ” o trineisinc rp ra dinto s dc o o te re ura ec ntra t b s do c to ins nc o c a e n us m a us g in theind try nd a e us › A merican Ins. v. A merican Reinsurance 2006 Lexis 95801, fn 3(N.D. C l. 2 0 ) c a 0 6 itingA etna v. Home Ins. Co. 8 2F. S p 13 8 8 up . 2
  • 14. W n isthe“ llo -the he Fo w - Fortune ” c s Do trineAp lie p d » Implied at Law: Courts have held that the “follow-the-fortunes” doctrine is not implied in reinsurance contracts as a matter of law. » Rather the doctrine applies if expressly included or included by custom and usage. » The doctrine could be implied based on course of dealing of the parties ›A merican Ins. v. A merican Reinsurance 2006 Lexis 95801, fn 3(N.D. C l. 2 0 ); North River Ins. v. Employers a 06 Reinsurance Corp. 19 F. S p 2 9 , 9 6 9 0(S 7 up . d 72 8 - 9 .D. Ohio 2 0 ) 02
  • 15. W t isGo rne b the“ llo - ha ve d y Fo w the rtune ” c -Fo s Do trine » TheDo trinea p sto c p lie : ›Theins r’d c io to s ttle ure s e is n e ; ›Theins r’w ive o c ve g d fe e ; ure s a r f o ra e e ns s ›Thea o o s ttle e m unt f e m nt; ›C im c ve d und r s ttle e la s o re e e m nt ›Thep s e m nt a c tio o thelo s o t-s ttle e llo a n f s
  • 16. W t isGo rne b the“ llo - ha ve d y Fo w the rtune ” c -Fo s Do trine » De is n to S ttle c io e : ›Theins r’d c io to s ttleise lua d ure s e is n e va te und r thed c e o trine: ›W sthed c io to s ttlere s na le a e is n e ao b ? ›W sit m d in g o fa a a e o d ith? ›North River Insurance v. A CE (North River II) 3 1 F.3 13 , 14 (2 . C 6 d 4 1 d ir. 20) 04
  • 17. W t isGo rne b the“ llo - ha ve d y Fo w the rtune ” c -Fo s Do trine » W ive o c ve g d fe e : a r f o ra e e ns s ›W sit re s na leund r e tingla ? a ao b e xis w ›W sit d nein g o fa a o o d ith? ›W sthew ive a ua ly w a a r rg b ithin the a p a lep lic la ua e p lic b o y ng g ? ›National Union v. A merican Re-Insurance Co. 4 1 F. S p 6 6(S 4 up . 4 .D.N.Y. 2 0 ) 06
  • 18. W t isGo rne b the“ llo - ha ve d y Fo w the rtune ” c -Fo s Do trine » Am unt o S ttle e o f e m nt ›W sit re s na le a ao b ? ›W sit in g o fa a o d ith ›W sit w a ithin thea p a lep lic p lic b o y › See Bellefonte Reinsurance v. Mission Insurance 9 3F.2 9 (2 . C 19 0 0 d 10 d ir. 9 ) (re ure no lia lefo ins re sc s in ins rs t b r u r’ o ts e e so e re sc p o lo sin re ura e xc s f xp s a n s ins nc c ntra t) o c
  • 19. W t isGo rne b the“ llo - ha ve d y Fo w the rtune ” c -Fo s Do trine » C im c ve db S ttle e la s o re y e m nt › C im s ttle m s b c im c ve db la s e d u t e la s o re y und rlyingp lic e o y ›North River Ins. v. Cigna 5 F.3 119 , 12 6(3 2 d 4 0 d C 19 5 ir. 9 ) › Ho e r, C urtsa p d c w ve o p ly o trineto w ive o a rs f c rta p lic d fe e a s o eo c ve g e in o y e ns s nd c p f o ra e ›S eNational Union v. A merican Re-Insurance 4 1 F. S p e 4 up . 2 6 6(S d 4 .D.N.Y. 2 0 ) (c im ‘ ua ly’ ithin 0 6 la s a b w rg p lic ye rsc n b s ttle ) o y a a ee d
  • 20. W t isGo rne b the“ llo - ha ve d y Fo w the rtune ” c -Fo s Do trine » C im c ve db S ttle e la s o re y e m nt ›FutureC im c n b c ve d b la s a e o re y s ttle e b tw e ins r a und rlying e m nt e e n ure nd e ins d ure ›Ins. Co. of Penn. v. A ssociated International 9 2F. 2 5 , 5 5( 9 C 19 0 2 d 16 2 th ir. 9 )
  • 21. De ns sUnd r theFo w fe e e llo - the rtune Do trine -Fo s c » TheDo trineisinte e to a p to m s c nd d p ly ot css ae: » “ fo w -fo ne d c the llo -the rtu s o trines p re uire im ly q s p ym nt w rethec d nt’g o fa p ym nt isa a e he e e s o d ith a e t le s a ua ly w a t rg b ithin thes o eo theins nc cp f ura e c ve g tha w sre ure . Thiss nd rdis o ra e t a ins d ta a purposefully low” › N ational Union v. American Re-Ins. 441 F. Supp. 2d 646, 650-651 (S.D .N .Y. 2006)
  • 22. De ns sUnd r theFo w fe e e llo - the rtune Do trine -Fo s c » Do trined e no a p to s ttle e c o s t p ly e m nts tha a t re ›Fra ule C llus ; M d in B d Fa ud nt; o ive a e a ith; ›C a a m nife tly o id te so le rly nd a s uts e rm f und rlyingp lic e o y ›Unre s na lea s lf-s rving a o b nd e e ›Hartford A V Columbia Cas. 98 cc. . F.Supp.2d 251, 258 (D . Conn.); Nat’ l Union v. A merican Re-Ins. 441 F. Supp. 2d 646, 650 (S.D .N .Y. 2006)
  • 23. De ns sUnd r theFo w fe e e llo - the rtune Do trine -Fo s c » S nd rdfo De ns sto Do trine ta a r fe e c : » “ a Fa re uire a extraordinary B d ith q s n showing o ad ing nuo o d ho s f is e us r is ne t failureto c rry o ac ntra t. The a ut o c s nd rdisno m rene lig nc b ta a t e g e e ut g s ne lig nc ” ro s g e e ›North River Ins. v. Cigna 5 F.3 119 , 12 3 d 4 17 (3 . C 19 5 d ir. 9 )
  • 24. De ns sUnd r theFo w fe e e llo - the rtune Do trine -Fo s c » B dFa S nd rd C n B M t b a ith ta a a e e y: › S w tha theins r d no u ea e e to ho ing t ure id t s n xp rt e lua theund rlyingc im va te e la › S w tha theins r unre s na ly a c te ho ing t ure a o b llo a d a thes ttle e to are ure p lic ll e m nt ins d o y › S w ins r inte l d c e tha s g s ho ing ure rna o um nts t ug e t a e rt to m nip tethea c tio n ffo a ula llo a n ›Hartford Cas. v. Columbia 9 F. S p 2 2 1, 8 up . d 5 2 8 (D. C nn.) 5 -9 o
  • 25. De ns sUnd r theFo w fe e e llo - the rtune Do trine -Fo s c » B dFa De ns : a ith fe e ›Fa t tha re ure p lic isonly policy to c t ins d o y w h s ttle e a c te isno per se hic e m nt llo a d t e e eo b d fa vid nc f a ith ›Nat’l Union v. A merican Re-Ins. 4 1 F. 4 S p 2 6 6 6 3(S up . d 4 , 5 .D.N.Y 2 0 ) 06
  • 26. De ns sUnd r theFo w fe e e llo - the rtune Do trine -Fo s c » De ns : Und rlyingS ttle e No fe e e e m nt t Within Te so P lic rm f o y: ›Thisd fe efa “ p ym nt o thec im e ns ils if a e f la isarguably within scope o thep lic f o y [ins d is ue to [und rlyingins d ure ] s d e ure ].” ›Re ure m t p vetha s ttle e w s ins r us ro t e m nt a “ clearly and manifestly o id s o eo uts e c p f there ure ’c ve g ” ins ds o ra e ›National Union. v. A merican Re-Ins. 441 F. Supp. 2d 646, 651 (S.D .N .Y 2006)
  • 27. De ns sUnd r theFo w fe e e llo - the rtune Do trine -Fo s c » De ns : Und rlyingS ttle e No fe e e e m nt t Within Te so P lic rm f o y ›Ins r isp rm d to ta d re ure e itte ke iffe nt p s nsvis ins d a re ure o itio ure nd -ins r ›Ag ins ins d ins r a ue tha c rta a t ure , ure rg d t e in c im m nife te b fo p lic p rio ; la s a s d e re o y e d ›Ag ins re ure ins r a ue tha a t -ins r, ure rg d t s m c im m nife te d a e la s a s d uringp lic o y p rio e d
  • 28. De ns sUnd r theFo w fe e e llo - the rtune Do trine -Fo s c » De ns : Allo a n No Re s na le fe e c tio t ao b : ›Ins r isp rm d to ta d re ure e itte ke iffe nt p s nsvis ins d a re ure o itio ure nd -ins r ›Ag ins ins d Ins r a ue tha c im a t ure , ure rg d t la s w refo m leo c nc s e r ultip c urre e ›Ag ins re ure Ins r a c te c im a t ins r, ure llo a d la s a as leo c nc s ing c urre e ›Travelers v. Gerling 4 F.3 18 18 (2 . 19 d 1, 6 d C 20) ir. 0 5
  • 29. De ns sUnd r theFo w fe e e llo - the rtune Do trine -Fo s c » De ns s Re s na le s : fe e : a o b ne s ›C urtsw find a a c tio re s na leif o ill n llo a n a o b ›It w so o s ve l re s na le a ne f e ra a o b a rna s lte tive ; ›It w sb s d o d p d la o la a a e n is ute w r w e tinga tim o a c tio xis t e f llo a n ›Travelers Ins. v. Gerling 4 F. 3 18 19 19 d 1, 4 (2 . C 2 0 ) d ir. 0 5
  • 30. Ap lic tio o Do trinein p a n f c M s To C nte a s rt o xt » Ins r s ttle num ro p nd a ure e s e us e ing nd futurec im b s do p a xc s la s a e n rim ry/e e s c ve g ; o ra e » Ins r a c te c im a ro ss ve l ure llo a s la s c s e ra ye rso p a a e e sp lic s a f rim ry nd xc s o ie » Ins r b re ure fo re ure ure ills ins r r ins d p rtio o p lic s o n f o ie .
  • 31. C ns e tio fo Re ure /Ins rs o id ra ns r ins rs ure ›Do stheDo trinee n a p ? e c ve p ly ›C ntra tua o c l? ›Im lie b C to a Us g ? p d y us m nd a e ›Im lie b C urs o De ling p d y o e f a ?
  • 32. C ns e tio fo Re ure /Ins rs o id ra ns r ins rs ure ›W sthes ttle e a o re s na le a e m nt m unt a o b ? ›W sthea c tio re s na le a llo a n a o b ? ›Re s na lea to p nd c im ao b s e ing la s ›Re s na lea to futurec im ao b t la s ›W sit re s na leto s ttlethec im tha a ao b e la s t w res ttle ? e e d ›Isthe e e eo b d fa o s lf- re vid nc f a ith r e s rvingb ins r? e y ure
  • 33. C ns e tio fo Re ure /Ins rs o id ra ns r ins rs ure ›Isthe e e eo b d fa o s lf- re vid nc f a ith r e s rvingb ins r? e y ure ›C urtslo k a ins r’inte l a lys s o o t ure s rna na e o a c tio f llo a n; ›C urtslo k a inte l d c e fo o o t rna o um nts r e e eo m nip tio vid nc f a ula n; ›Hartford Cas. v. Columbia 9 F. S p 2 2 1, 2 8 8 up . d 5 5 -9 (D. C nn.) o ›
  • 34. C ns e tio fo Re ure /Ins rs o id ra ns r ins rs ure ›o C urtslo k a w the p rs ns o t he r e o m kinga c tio w rea a o a llo a n e w re f re ura ec ve g ins nc o ra e ›Travelers Ins. v. Gerling 4 F. 3 18 19 (2 . 19 d 1, 2 d C 20) ir. 0 5
  • 35. C ns e tio fo Re ure /Ins rs o id ra ns r ins rs ure » Lim tio o Evid nc o B dFa ita ns n e e f a ith: ›“ E’a p a re s . ..o s e ificfa tua AC s p e l lie . n pc c l info a n o w h it a g sNo rm tio n hic lle e rth Rive re d in itss ttle e ne o tio … r lie e m nt g tia ns But it is precisely this kind of intrusive factual inquiry into the settlement process that the deference prescribed by the [doctrine] is designed to prevent” North River Ins. v. A (N orth River II) 361 CE
  • 36. C ns e tio fo Re ure /Ins rs o id ra ns r ins rs ure » S nd rdfo a p ta a r p lyingd c o trine“ is p oe urp s fully lo ” w ›National Union v. A merican Re-Ins. 441 F. Supp. 2d 646, 650-651 (S.D .N .Y. 2006) » Proof of bad faith/ collusion requires “extraordinary showing of a disingenuous or dishonest failure to follow the contract” ›Travelers Ins. v. Gerling 4 F. 3 18 19 (2 . C 19 d 1, 1 d ir. 20) 05
  • 37. C ns e tio fo Re ure /Ins rs o id ra ns r ins rs ure » C ns e tio o id ra ns ›P -J g e Inte s o unp id c im re ud m nt re t n a la . ›National Union v. A merican Re-Ins. 441 F. Supp. 2d 646, 655 (S.D .N .Y. 2006)
  • 38. C nc io o lus n » “ llo -the rtune ” a p a le Fo w -Fo s if p lic b : ›Isd fe ntia to ins r’ e re l ure s ›S ttle e De is ns e m nt c io ›Allo a n o lo s c tio f s › C nta hig hurd sfo re ure o in h le r ins rs se e kingto c lle es ttle e d c io ha ng e m nt e is ns a a c tio o lo s nd llo a n f s .

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