Since the 1970s cedents and reinsurers have been battling over long-term environmental pollution damage. Disputes have arisen over the number of retentions that the cedent should take, the manner in which settlement with the insured should be allocated and other issues. In a recent case, a reinsurer sought summary judgment on a cedent’s breach of contract claim over a specific pollution claim. Unsurprisingly, disputed facts got in the way.
In Alabama Municipal Insurance Corp. v. Munich Reinsurance America, Inc., No. 2:20cv300-MHT (M.D. Ala Apr. 26, 2023), the cedent and reinsurer disputed (over several claims) how many retentions the cedent was required to take and how many claims existed. The cedent settled the underlying loss and submitted the costs to the reinsurer as a single loss against one treaty. The cedent sued the reinsurer alleging breach of contract, among other claims, for failing to pay the settled loss as a single claim under the treaty.