The Insurance & Reinsurance Report

This bill amends existing law that provides for prevention, detection and investigation of insurance fraud to include Workers’ Compensation and requires insurers to disclose Workers’ Compensation insurance fraud incidents. It also protects a person sharing information pursuant to the authorization from civil liability.

Louisiana

House Bill 201

(Introduced Apr. 7, 2009, Last Action July 9, 2009)

This bill relates to automobile property casualty and liability insurance policy and provides for non-renewal …

July 29, 2009 Reinsurance

District Court Adds Prejudgment Interest in the Amount of $8.3 Million to Cedent’s Award in Reinsurance/Broker Dispute

United National Ins. Co. v. Aon, Ltd. (E.D.P.A., July 24, 2009)

A federal court judge in the Eastern District of Pennsylvania tacked on an additional $8.3 million in prejudgment interest against a broker in action brought as a result of recession of a reinsurance policy. In 1999, after claims exceed the income generated by the premiums, the reinsurer sought to rescind its policies reinsuring policies issued by the insured for building contractors. In an arbitration proceeding, the reinsurer argued the insurer and/or broker had mislead it entering into

July 27, 2009 Directors and Officers

Marketing Company and its Officers who Circulated Spam to MySpace Users are Not Entitled to Coverage and Insurers Are Granted Reimbursement

Greenwich Ins. Co. v. Media Breakaway, LLC

(C.D. Cal. July 22, 2009)

Defendants online marketing company and corporate officer were sued by MySpace Inc. for sending spam mail through MySpace users’ accounts without their knowledge through ‘phishing’. Defendants held a directors’ and liability insurance policy and an errors omissions insurance policy. Each policy excluded coverage for intentionally dishonest conduct, and claims made as a result of profit gained by the policyholder to which it was not entitled. The court held that …

July 23, 2009 Life, Health, Disability & ERISA

The D.C. Circuit Court Requires the SEC to take a Second Look at its Regulation of Fixed Index Annuities

American Equity Investments v. SEC (D.C. Cir., July 21, 2009)

As any savvy investor knows, “annuity contracts” or “optional annuity contracts” that are the subject of State regulations are exempt from the Securities Act of 1993. See American Equity Investment Life Ins. Co. v. Securities Exchange Comm., Case No: 09-1021 (D.C. 2009). A hybrid annuity termed a “fixed index annuity” combined certain benefits of fixed annuities, along with the earning potential of a security. Subsequent to their introduction in the mid-1990’the sales volume …

July 21, 2009 Legislative Update

Insurance Legislative Update for All 50 States

California

Senate Bill 156

(Introduced Feb. 12, 2009, Last Action July 13, 2009)

This bill amends existing law that provides for prevention, detection and investigation in insurance fraud to include Workers’ Compensation and requires insurers to disclose Workers’ Compensation insurance fraud incidents. It also protects a person sharing information pursuant to the authorization from civil liability.

Louisiana

House Bill 201

(Introduced Apr. 7, 2009, Last Action July 9, 2009)

This bill relates to automobile property casualty and liability insurance policy and provides for …

July 20, 2009 Directors and Officers

Georgia Court Of Appeals Affirms Summary Judgment For Broker On Claims Alleging Failure To Procure Sufficient D&O Coverage

Four Seasons Health Care, Inc. et al v. Willis Insurance Services of Georgia, Inc.

(Georgia Court of Appeals, July 15, 2009)

Policyholders initiated this action alleging that broker failed to procure adequate directors and officers (D&O) liability insurance to cover claims arising out of a shareholder’s suit. The underlying suit involved claims by a shareholder’s group (owning more than 5%of the voting stock) that they were wrongfully frozen out of the opportunity to purchase foreclosure stock by the policyholder’s, one of whom was the …

July 17, 2009 CaseWatch

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July 16, 2009 Policy Conditions, Considerations, Construction, and Formation

Failure to Comply with Claims-Made-and-Reported Requirement Vitiates Coverage Under Professional Liability Policies

Gargano v. Liberty Int’l Underwriters, Inc.

(1^st Cir. (Mass.) July 14, 2009)

An attorney sued the policyholder, also an attorney, after the policyholder failed to pay an attorney’s lien for work the plaintiff attorney completed on a case ultimately transferred and settled by the policyholder. The plaintiff attorney filed suit in March 2005 and entered judgment against the policyholder in July 2007. After judgment was entered, the policyholder reported the claim to his three professional liability insurers, which had issued three consecutive “claims-made-and-reported” policies …

July 15, 2009 Bad Faith and Extra-Contractual Liability

Policyholders’ Children Seeking Bad Faith Penalties Against Insurer Denied

Gaffney v. State Farm Fire and Casualty Co.,

E.D. of LA (July 2, 2009)

The policyholder filed a claim against their insurer asserting that the insurer did not adequately adjust their claim after their home was damaged by Hurricane Katrina and sued the insurer for damages and bad-faith penalties. The policyholders then instituted another action on behalf of their children, asserting they are additional insureds and are entitled to bad-faith penalties for the insurer’s mishandling of the parents’ claim.

The District …