Follow-the-fortunes is a reinsurance concept that often is misconstrued. Some wish to impose it on every reinsurance contract regardless of whether a follow-the-fortunes clause exists. Cedents invoke it to compel payment from their reinsurers. In a recent case, the Eleventh Circuit had an opportunity to weigh in on whether the follow-the-fortunes doctrine should be inferred regardless of the contract wording and whether the terms of the reinsurance contract contained follow-the-fortunes language.
In Public Risk Management of Florida v. Munich Reinsurance America, Inc., No. 21-11774 (11th Cir. Jun. 29, 2022), an insurer of public entities sought reinsurance coverage for an underlying claim involving a Section 1983 claim that the local government interfered with a property owner’s rights by allowing beach access through the property owner’s property. The facts indicated that the dispute had been going on for some time. The reinsurer only reinsured the cedent for a specific period of time on an occurrence basis and its reinsurance contract had typical reach-back language in its definition of an occurrence.
