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Reinsurer Efforts to Avoid the 'Follow the Fortunes' Doctrine Should Be Rejected
When dealing with 'captive' reinsureds, some reinsurers seek to restrict their obligations under applicable reinsurance agreements, in an effort to obtain rights held by 'direct' insurers, but rarely extended to reinsurers. A captive reinsured is one whose '[i]nsurance provides coverage for the group or business that established it.' Black's Law Dictionary 803 (7th ed. 1999). Indeed, while reinsurers have similar 'duties' as direct insurers, such as the duty to act in good faith, their 'rights' are much more limited. Most importantly, and based upon well-established custom and practice, case law, and applicable contractual language, a reinsurer has no right to conduct its own investigation into coverage decisions made by its reinsured and in only very limited circumstances may it second-guess those decisions. In fact, unless a reinsurer can prove bad faith conduct by its reinsured in handling claims made by underlying insureds, a reinsurer generally has no choice but to reimburse its reinsured for amounts paid pursuant to underlying policies.
Despite this fact, some reinsurers argue a right to change these established rules in order to find excuses to avoid payment obligations under their reinsurance agreements. In particular, these reinsurers claim a right to review all information gathered by their reinsureds in evaluating underlying claims, and even attempt to conduct their own detailed, expensive, and time-consuming investigations. Based upon the information independently gathered, these reinsurers then challenge the adequacy of their reinsureds' evaluations of underlying claims and decisions to pay those claims. In other words, such reinsurers use the information that they gather to second-guess their reinsureds' coverage determinations in order to avoid their duties to reimburse their reinsureds for amounts paid.
Such efforts, however, should be rejected. Significantly, under a reinsurance agreement, the decision as to whether the insurance policy issued to the policyholder provides coverage for the underlying claim is a decision for the reinsured to make, not for the reinsurer ' the coverage investigation is the obligation of the reinsured, and generally is not within the rights of the reinsurer.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Warehouse Liability: Know Before You Stow!
As consumers continue to shift purchasing and consumption habits in the aftermath of the pandemic, manufacturers are increasingly reliant on third-party logistics and warehousing to ensure their products timely reach the market.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?