Settlement allocations of long-tail losses like pollution claims have long been a source of disputes between cedents and reinsurers. Often the allocation of the underlying settlement depends on the allocation methodology used based on the law of the relevant jurisdiction. The issue becomes more complicated where the reinsurance contract is governed by the law of a different … [Read more...] about Cedent Prevails on Back-to-Back Reinsurance Recovery
US NAIC Update: Restructuring Mechanisms (E) Working Group
At its recent meeting on April 4, 2023, the Restructuring Mechanisms (E) Working Group (the “Working Group”) of the US National Association of Insurance Commissioners (“NAIC”) continued to advance the best practices framework it is developing for Insurance Business Transfers (“IBTs”) and Corporate Divisions (“CDs”) in the United States. An IBT is a transaction whereby a … [Read more...] about US NAIC Update: Restructuring Mechanisms (E) Working Group
Understanding and Using Body Language to Improve Negotiations
“Let Me Hear Your Body Talk…”1 Negotiation Strategies: Tips for Establishing Connection and Optimizing Results Series: Part 5 See if you recognize this scenario: you're in a meeting trying to convince the other side to take your position. But something’s not right. You don't feel comfortable. The mood in the room is guarded and tense. You really don't know why: The sun is … [Read more...] about Understanding and Using Body Language to Improve Negotiations
ESG Battlegrounds: How the States Are Shaping the Regulatory Landscape in the U.S.
When it comes to ESG in the United States, among the most dramatic developments is an ideological battle unfolding at the state level, pitting liberal-leaning state governments that have embraced ESG-focused investing against conservative-led states that would seek to exclude it. To date, the general consensus had been that the U.S. is lagging on its ESG focus, particularly … [Read more...] about ESG Battlegrounds: How the States Are Shaping the Regulatory Landscape in the U.S.
Ethical Use of AI in Insurance Modeling and Decision-Making
With increased availability of next-generation technology and data mining tools, insurance company use of external consumer data sets and artificial intelligence (AI) and machine learning (ML)-enabled analytical models is rapidly expanding and accelerating. Insurers have initially targeted key business areas such as underwriting, pricing, fraud detection, marketing distribution … [Read more...] about Ethical Use of AI in Insurance Modeling and Decision-Making
Third Circuit Reverses; Dismisses LTL’s “Texas Two-Step” Bankruptcy Case
In the AIRROC Annual 2022, the authors published “Dancing to the Beat of Divisive Mergers; The ‘Texas Two-Step’ Bankruptcy Strategy,” summarizing the strategy and discussing several recent cases.1 Most notably, the LTL Management, LLC (Johnson & Johnson) case was discussed in detail. In that case, the talc claimants and others filed a motion to dismiss, arguing that the … [Read more...] about Third Circuit Reverses; Dismisses LTL’s “Texas Two-Step” Bankruptcy Case
Why Reinsurance Arbitration or Mediation Is More Efficient Than Litigation
The battle between whether reinsurance disputes should litigated or arbitrated (or mediated) continues even though most reinsurance disputes are subject to arbitration provisions in the reinsurance contracts. There are arguments on both sides, of course, and no one can argue that arbitration has not become more like litigation. While I favor arbitration and mediation (for … [Read more...] about Why Reinsurance Arbitration or Mediation Is More Efficient Than Litigation
Arbitration in the Courts
Functus Officio gets a new exception: Second Circuit holds that district courts remand of unreasoned award to arbitrator does not violate the functus officio doctrine. Smarter Tools, Inc. v. Chongqing SENCI Import & Export Trade Co., Ltd., No. 21-724, (2d Cir. January 17, 2023). The functus officio doctrine – Latin for having “completed one’s office” – dictates … [Read more...] about Arbitration in the Courts
Third Circuit Dismisses Chapter 11 Filing by Johnson & Johnson Subsidiary Formed to Segregate Talc Liabilities
In a closely watched decision, the Court of Appeals for the Third Circuit ordered the dismissal of the Chapter 11 petition of LTL Management, LLC, the entity created by Johnson & Johnson to hold J&J’s talc-related liabilities in a divisional merger process under Texas law. Reversing the Bankruptcy Court for the District of New Jersey, the Third Circuit held that … [Read more...] about Third Circuit Dismisses Chapter 11 Filing by Johnson & Johnson Subsidiary Formed to Segregate Talc Liabilities
From the Brink: Tips to Revive A Stalled Mediation
Negotiation Strategies: Tips for Establishing Connection and Optimizing Results Series: Part 4 Mediation is generally a useful way to slow negotiating parties down and open their minds to optional pathways to an acceptable settlement. Accompanied by a willing counterparty and qualified, experienced mediator, you can often move immovable issues, explore “win-win” propositions, … [Read more...] about From the Brink: Tips to Revive A Stalled Mediation
The “Texas Two-Step” Bankruptcy Strategy
Panelists John Cruciani and Scott Davis, both Partners with Husch Blackwell gave an insightful presentation on the Texas Two-Step Bankruptcy, explaining how it works and providing an overview of the Texas corporate statutes from which the maneuver flows. They also discussed the high profile case of Johnson & Johnson (“J&J”), as well as an update on other ongoing cases, … [Read more...] about The “Texas Two-Step” Bankruptcy Strategy
Litigation Funding and Social Inflation: An Increasing Concern for Insurers
On a sweltering day in NYC, AIRROC opened its Summer Membership Education Day with a panel of experts that described our own industry climate change: the social inflation that is driving nuclear verdicts and run-away inflation in losses. Just as climate change increases the intensity of storms, the social climate surrounding litigation has increased the potential for more … [Read more...] about Litigation Funding and Social Inflation: An Increasing Concern for Insurers
The End of ‘Bellefonte’: ‘Global Re’ and the Proper Reading of Facultative Reinsurance Contracts
In late December 2021, the U.S. Court of Appeals for the Second Circuit issued a blockbuster decision grappling with the Erie doctrine, stare decisis, and overturning a decades-old precedent. It was the fourth appellate decision in a lengthy litigation reminiscent of Dickens’ Bleak House. This was not litigation about constitutional rights or environmental justice, but a case … [Read more...] about The End of ‘Bellefonte’: ‘Global Re’ and the Proper Reading of Facultative Reinsurance Contracts
Florida and Punitive Damages
Have you noticed an influx of hearings in Florida to add punitive damages to complaints lately? Here's why: Asserting a punitive damages claim is a strategy often utilized by plaintiffs to obtain financial discovery from commercial defendants to which they would otherwise not be entitled. The Florida Supreme Court amended Florida Rule of Appellate Procedure 9.130 regarding … [Read more...] about Florida and Punitive Damages
Drop Anchor or Anchors Aweigh? Making the First Offer In Negotiations
Negotiation Strategies: Tips for Establishing Connection and Optimizing Results Series: Part 3 Years ago, my wife and I took a trip to Mexico. The worker in me was ready to kick back and put down a tequila or two. But my inner negotiator was anxious to test his skills at a Mexican mercado (market). Who would win the test of wills between the novice American buyer and savvy … [Read more...] about Drop Anchor or Anchors Aweigh? Making the First Offer In Negotiations
Challenges of Reserving Federal Black Lung Liabilities
Christine M. Fleming and Alex M. York, of Milliman provided a compelling presentation on the complexities of federal black lung claims at the AIRROC Spring Membership meeting. As coal continues to decline - the number of jobs nationwide fell to about 40,000 last year from 175,000 in the mid 1980s - you would anticipate that the number of claims for black lung occupational … [Read more...] about Challenges of Reserving Federal Black Lung Liabilities
2 High Court Cases That Can Alter Arbitration Playing Field
Each year, the U.S. Supreme Court faces a large number of certiorari petitions seeking review of a wide variety of civil disputes. The court in recent years has consistently found room on its docket to address disputes regarding the Federal Arbitration Act, which sets out the statutory scheme for the judicial facilitation of dispute resolution through arbitration. Two … [Read more...] about 2 High Court Cases That Can Alter Arbitration Playing Field
Buying English Law When You Place London Market Reinsurance?
Cedents based in the United States should be aware that they may be buying (or, indeed, have already bought years ago) English law to govern interpretation of their reinsurance contracts placed in the London market. In a US court presiding over a lawsuit involving reinsurance placed in London, English law can apply despite the American forum. In any given case, whether the … [Read more...] about Buying English Law When You Place London Market Reinsurance?
Prepare, Prepare, and Also, Prepare.
Negotiation Strategies: Tips for Establishing Connection and Optimizing Results Series: Part 2 We all know the scenario: You’ve been chasing your counterparty for weeks, trying to get either payment, a meeting, or a substantive response. On your end, you reviewed the file and calculated how much you want and, perhaps, how much you might settle for, based upon YOUR analysis … [Read more...] about Prepare, Prepare, and Also, Prepare.
Getting to Yes: Where It All Began
Series: Negotiation Strategies: Tips for Establishing Connection and Optimizing Results We all do it every day: with our spouses and significant others, with our children, co-workers and counterparties, with people getting on and off of an elevator, and even while jockeying with other cars in traffic. The “it” is negotiation: exchanging verbal or non-verbal messages with a … [Read more...] about Getting to Yes: Where It All Began