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Posts Tagged ‘reinsurance’

Introducing The Arbitration Law Forum

September 9th, 2020 ADR Social Media, The Arbitration Law Forum 1 Comment »

Arbitration Law ForumIn case you haven’t already noticed, the Loree Reinsurance and Arbitration Law Forum is now the Arbitration Law Forum. The Loree Reinsurance and Arbitration Law Forum began publishing articles about arbitration, arbitration-law, reinsurance, and insurance issues when it was launched by Loree & Loree in March 2009.  Our first post is here.

The blog’s principal focus was arbitration- and arbitration-law-related matters, though it published from time-to-time articles about reinsurance- or insurance-related matters unrelated to arbitration. To date, and not including this post, the blog has published 310 posts. But Loree & Loree, which was formed in August 2008 by Philip J. Loree (“Loree Sr.”) and Philip J. Loree Jr. (“Loree Jr.”), recently became The Loree Law Firm. Loree Sr. recently retired from the practice of law after 61 years of practice, and Loree Jr. is continuing the practice as The Loree Law Firm. The change of firm name necessarily required changes to the firm’s website, and so Loree Jr. took that opportunity to rename the blog “The Arbitration Law Forum.” The main focus of The Arbitration Law Forum will continue to be arbitration, arbitration-law, and arbitration litigation, but it may, on occasion, also publish articles on reinsurance, insurance, and other commercial and business contract issues unrelated to arbitration. We hope the Arbitration Law Forum’s new name will widen its audience by emphasizing its focus on arbitration and arbitration law while de-emphasizing—but not forsaking—its occasional coverage of reinsurance and insurance issues. The next post will continue our Businessperson’s Federal Arbitration Act FAQ Guide series and focus on vacating arbitration awards on the ground of fraud or undue means.

Contacting the Author

If you have any questions about this article, or about arbitration, arbitration-law, or arbitration-related litigation, please contact the author, Philip Loree Jr., at (516) 941-6094 or at

Philip J. Loree Jr. has 30 years of experience handling matters arising under the Federal Arbitration Act and in representing a wide variety of clients in arbitration, litigation, and arbitration-related litigation.

ATTORNEY ADVERTISING NOTICE: Prior results do not guarantee a similar outcome.

Photo Acknowledgment

The photo featured in this post was licensed from Yay Images and is subject to copyright protection under applicable law.

Kathy Billingham, Peter Scarpato and Andy Walsh are Founding Members and Officers of REMEDI, the Re/Insurance Mediation Institute

August 27th, 2009 Mediation, Reinsurance Mediation 1 Comment »

Kathy Billingham, Peter Scarpato and Andy Walsh have, along with others, formed REMEDI, the Re/Insurance Mediation Institute, to promote and foster mediation in reinsurance and insurance disputes.  Kathy is the Chair and Chief Executive Officer, Peter is the Vice-Chair and President, and Andy is the Secretary and Treasurer. The Directors are Larry Monin, Jonathan Rosen, David Thirkill and Elizabeth Thompson, and other founding members are Paul Dassenko, Richard Waterman, Jim Stinson of Sidley Austin LLP, and Vince Vitkowsky and Jim Shanman of Edwards Angell Palmer & Dodge LLP, which serves as pro bono outside general counsel.

Congratulations and good luck!

House of Lords Hands Down Landmark Reinsurance Decision: Lexington Insurance Co. v. AGF Insurance Ltd.

August 22nd, 2009 Asbestos-Related Claims, Environmental Contamination Claims, Follow-the-Settlements/Follow-the Fortunes, House of Lords, Reinsurance Allocation, Reinsurance Claims Comments Off on House of Lords Hands Down Landmark Reinsurance Decision: Lexington Insurance Co. v. AGF Insurance Ltd.

Part II of a Two-Part Post


In Part I we discussed the controversy surrounding the House of Lords decision in Lexington Insurance Co. v. AGF Insurance Co. [2009] UKHL 40.  The House ruled that two proportional facultative reinsurers were not obligated to indemnify the cedent for their share of the entire amount of a judgment a Washington State court rendered against the cedent in an environmental coverage action.  The judgment, which was based on Pennsylvania law, rendered the cedent liable under the policy jointly and severally for property damage caused by environmental contamination that occurred before, during and after the three-year policy period.  The House ruled that the reinsurers could be held liable only for their respective shares of the loss that occurred during the three-year term of the reinsurance contract (which was concurrent with that of the cedent’s policy), not their shares of the total amount of loss for which the Washington judgment held the cedent liable under the reinsured policy. 

In this Part II we briefly summarize the pertinent background of the case, walk the reader through the House’s reasoning and offer a few parting thoughts.      Continue Reading »

House of Lords Hands Down Landmark Reinsurance Decision: Lexington Insurance Co. v. AGF Insurance Ltd.

August 18th, 2009 Asbestos-Related Claims, Environmental Contamination Claims, Follow-the-Settlements/Follow-the Fortunes, House of Lords, Reinsurance Allocation, Reinsurance Claims Comments Off on House of Lords Hands Down Landmark Reinsurance Decision: Lexington Insurance Co. v. AGF Insurance Ltd.

Part I of a Two-Part Post


Effective October 1, 2009 the House of Lords will be replaced by the Supreme Court of the United Kingdom (more information here).  In what may be among its last official acts, on July 30, 2009 the House decided an important reinsurance case concerning the scope of a reinsurer’s indemnity obligation to a U.S. cedent under English law.  See Lexington Insurance Co. v. AGF Insurance Co. [2009] UKHL 40.  The reinsurance contract was back-to-back with the reinsured policy in all but one respect:  it was governed by English law, while the insurance policy was, in the event of coverage litigation, potentially subject to the laws of any number of U.S. jurisdictions, depending on venue, applicable choice of law rules and other considerations.  Relying on a long-line of English law precedent, and distinguishing other precedent, the House ruled that a proportional facultative reinsurer was not obligated to indemnify the cedent for the reinsurer’s share of the entire amount of a judgment a state court in Washington rendered against the cedent.  The judgment resulted from a Washington Supreme Court decision which, applying Pennsylvania law, ruled that the cedent was jointly and severally liable under its policy for property damage caused by environmental contamination that occurred before, during and after the cedent’s three-year policy period.  The House said that, judgment or no judgment, the reinsurer agreed to reinsure only loss or damage occurring during the coterminous, three-year period of the reinsurance contract, and the reinsurer’s obligation was limited to its share of that loss. 

The House’s decision is likely to be controversial.  In this Part I of a two-part post, we shall discuss the controversy and seek to allay it a bit.  In Part II we’ll walk the reader through that reasoning and offer some parting comments. 

The Controversy

Complex environmental-contamination and asbestos-related claims are anything if not costly.  American insurers have been fighting an expensive, multi-front war with their insureds for many years over the scope and extent of their liability for these claims.  They raise a myriad of issues and are potentially governed by the laws of at least fifty different jurisdictions (some sympathetic to insurers, some not).   These jurisdictions have adopted different approaches to resolving the issues (some favorable to insurers, some not), which means that no matter where may be the venue, complex choice-of-law questions are likely to arise.  And the coverage actions usually involve multiple insurers, sites, claimants, years of coverage, and layers of coverage.  The amount at stake and the concomitant expense can be staggering.  For the most part, these claims and coverage disputes — let alone how some courts might resolve them — could not reasonably have been anticipated at the time when most of the occurrence policies on which they arose were written (generally prior to 1980 and sometimes going back to the 1930s).  Continue Reading »

The Art and Science of Mediation: A Brief Recap of the July 14, 2009 Don Philbin/Randall Kiser/Katherine Billingham ABA Teleconference

July 17th, 2009 Asbestos-Related Claims, Mediation, Reinsurance Mediation Comments Off on The Art and Science of Mediation: A Brief Recap of the July 14, 2009 Don Philbin/Randall Kiser/Katherine Billingham ABA Teleconference

Readers may remember our July 1, 2009 announcement concerning an American Bar Association teleconference on mediation hosted by Don Philbin, Randall Kiser and Katherine Billingham (post here).  The conference took place as scheduled on July 14, 2009, and we thought it was excellent.

Don Philbin and Randall Kiser explained a theory of mediation based on a combination of brain science, psychology, statistical analysis, and computer graphics, which we thought was as inspiring as it was fascinating.  They discussed the results of empirical studies of decisional errors in litigation, comparing last settlement positions of parties who failed to settle to the ultimate outcome of the proceeding.  They explained who did better, who did worst, and what the cost of the error was.  They also described a technique that can overcome psychological barriers to settlement that uses graphically-depicted outcome-scenarios.  Randall discussed a book he is writing, which will explain and advocate a scientific approach to decision making, and which will delve into the legal malpractice considerations associated with poor decision making.  Randall’s book will hit the shelves this fall.

Once upon a time I thought mediation was, to a significant extent, based on “touch” and “feel,” but Don and Randall have proved me wrong.  To some extent it is certainly an art, but science plays an important role, especially when the mediators are trained to use it properly.  

Katherine Billingham discussed a scientific approach to resolve through mediation complex multi-insurer, multi-layer, multi-year asbestos-related insurance coverage disputes, using excellent graphics.  She explained how these disputes can be mediated in a multi-phase process that takes into account nearly every one of the myriad of variables that must be considered.  Her methodology can also be applied to complex reinsurance disputes, which she also mediates.

All in all, there was much useful information packed into the one-hour presentation, and we view it as a springboard for further research and study.  Kudos to all involved!

Travelers Indemnity Co. v. Bailey: United States Supreme Court Holds 1986 John-Manville Bankruptcy Court Injunction Bars Direct Asbestos-Related Claims Against The Travelers

July 8th, 2009 Asbestos-Related Claims, United States Supreme Court Comments Off on Travelers Indemnity Co. v. Bailey: United States Supreme Court Holds 1986 John-Manville Bankruptcy Court Injunction Bars Direct Asbestos-Related Claims Against The Travelers


On June 18, 2009 the United States Supreme Court ruled 7-2 that an injunction (the “1986 Injunction”)  incorporated into the 1986 Johns-Manville Corp. (“Manville”) bankruptcy reorganization order (the “1986 Order”) barred claims made directly against Manville’s insurer, the Travelers Indemnity Company (“Travelers”), even though those claims were derivative of Travelers’ alleged wrongdoing, as opposed to that of Manville.  See Travelers Indemnity Co. v. Bailey, ___ U.S. ___ (June 18, 2009) (Souter, J.) (copy available here).  The Court held that:  (a) the claims fell within the terms of the 1986 Injunction; and (b) the claimants were barred by res judicata from collaterally attacking the Bankruptcy Court’s subject-matter jurisdiction to enter the 1986 Order containing the 1986 Injunction.  Slip op. at 1-2 & 9-10. 

The decision should bring some degree of finality to Manville’s insurers’ exposure to asbestos-related claims, which has been a moving target for quite some time.  The effect, if any, the decision may have on reinsurance claims and disputes is not yet clear.  That said, now that Travelers’ liabilities presumably can more easily be quantified, cedents, retrocedents, reinsurers and retrocessionaires whose claims and liabilities are derived from Travelers’ and other Manville insurers’ liabilities might be in a better position to attempt to settle or commute those claims and liabilities.  And, in a more general sense, the decision provides some guidance on how bankruptcy-court channeling-injunctions should be interpreted, and the extent to which, if at all, such injunctions may be collaterally attacked for lack of subject-matter jurisdiction.  Continue Reading »

Reinsurance Nuts & Bolts: Honorable Engagement Clauses

May 18th, 2009 Arbitrability, Authority of Arbitrators, Nuts & Bolts, Nuts & Bolts: Reinsurance, Reinsurance Arbitration 1 Comment »


In today’s Nuts & Bolts post we take a brief look at honorable engagement clauses, which are sometimes referred to as “honorable undertaking” clauses.  Honorable engagement clauses are, for practical purposes, a species of choice of law clause.   Generally, they confer upon arbitration panels a degree of freedom to depart from the strict rules of law and evidence, and to interpret the contract as an honorable engagement rather than literally according to its terms.  They are premised on the now arguably outmoded historical concept that a reinsurance contract is more than a contract, but an honorable undertaking, a deal that  is closed when the parties shake hands over a cocktail (or three), and one by which the parties are honor-bound to abide.  They also recognize that reinsurance is an arcane business with its own peculiar set of customs, practices and norms, and that, if the parties so agree, arbitrators should be reasonably free to apply these norms in deciding a case, even if a court faced with the same facts would or could not. 

Honorable engagement clauses are more common in older reinsurance contracts than in those written today.  But many reinsurance disputes arise out of long-tail asbestos or environmental claims arising out of decades-old contracts, a great many of which contain these clauses.  And the clauses can have some significant implications in those disputes. Continue Reading »

ReliaStar Life Insurance Co. v. EMC National Life Co.: Second Circuit Holds That Life Reinsurer Must Pay Ceding Company Attorney and Arbitrator Fees Notwithstanding Contract Language to the Contrary

April 21st, 2009 Arbitrability, Authority of Arbitrators, Awards, Life Reinsurance, Reinsurance Arbitration, United States Court of Appeals for the Second Circuit 3 Comments »


On April 9, 2009 the United States Court of Appeals for the Second Circuit decided a case that may significantly expand the power of arbitrators to award attorney and arbitrator fees in cases involving reinsurance and other contracts.  The Court held that an arbitration panel was authorized to award under the bad faith exception to the American Rule attorney and arbitrator fees to a ceding company in a case where the parties had agreed that “[e]ach party shall bear the expense of its own arbitrator.  .  .  and related outside attorneys’ fees, and shall jointly and equally bear with the other party the expenses of the third arbitrator.”  ReliaStar Life Ins. Co. v. EMC National Life Co.,  ___ F.3d ___, ___ (2009) (Raggi, J.).  This post briefly discusses the majority and dissenting opinions.  Our critical analysis will be provided in a subsequent post.  Continue Reading »

What does the Arbitration Fairness Act of 2009 Have to Say About Commercial and Industry Arbitration Involving Sophisticated Parties? (Part IIIC)

April 11th, 2009 Arbitrability, Authority of Arbitrators, Legislative Developments, United States Supreme Court 1 Comment »

Part IIIC:  Is the Narrow Construction Sustainable?


In Part IIIB  (here) we discussed in general terms the “Narrow Construction” of the Arbitration Fairness Act of 2009 (the “Fairness Act”), which would limit the scope of Proposed Section 2(c) to situations where the party resisting arbitration claims that the arbitration agreement requires predispute arbitration of consumer, franchise, employment or statutory civil rights disputes.   We also set forth the five premises on which the Narrow Construction is based.  This Part IIIC addresses the validity of those premises.  [Because this post  frequently refers to Proposed Section 2 and its subsections, we have reproduced at the end the pertinent parts of Proposed Section 2.]

 The Narrow Construction is fairly complex.  A court choosing it would have to determine each of its five premises to be valid.  In addition, the validity of Premise 3 is interlinked to that of Premise 5:  Premise 3 is easier to accept when viewed without regard to Premise 5 and Premise 5 is harder to accept when viewed in isolation from Premise 3.  If a court believes that Premise 3 is reasonable, but has reservations about its validity, when it considers Premise 3 in conjunction with Premise 5, it may conclude that both are invalid.  But if it is confident that Premise 3 is valid, that confidence might lead it to conclude that Premise 5 is valid.  These are important considerations that a party advocating one construction or the other should take into account in structuring its argument.   Continue Reading »

Introducing “Nuts & Bolts” Posts

March 29th, 2009 General, Nuts & Bolts 2 Comments »

From time to time we shall feature “Nuts & Bolts” posts, which are designed to provide basic information on reinsurance- or arbitration-related topics.  These posts are intended to be a resource for in-house and outside counsel, arbitrators, law students, and other persons who are interested in reinsurance or arbitration law (or both).  Our coverage is not intended to be comprehensive, but merely to provide some hopefully helpful background and a springboard for further research.     Continue Reading »