Other state insurance regulators have responded coolly to the report released by the New York Department of Financial Services on June 12. That report recommended that “State insurance commissioners should consider an immediate national moratorium on approving additional shadow transactions until those investigations are complete . . . .” …
Read More Delaware Rejects New York’s Call for a Moratorium on Securing Reserves with Captive Insurance Companies, While the NAIC Refuses to Act Hastily

On 7 June 2013, the FCA published the report on its thematic review of motor legal expenses insurance (MLEI). MLEI provides cover for legal expenses incurred when a not-at-fault policyholder tries to recover uninsured losses from the driver who caused the accident. Some policies also provide cover for criminal defence costs where a policyholder is facing prosecution. …
Read More UK: FCA Publishes Report on Thematic Motor Legal Expenses Insurance Project

On June 12, 2013, the Treasury’s Federal Insurance Office (“FIO”) released its first annual report on the insurance industry to the President and Congress, as mandated under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). The Report discusses in more detail a number of the items covered in the Financial Stability Oversight Council’s (“FSOC”) last annual report, issued this past May.[1] …
Read More FIO Issues Its First Annual Report

A liability insurer found to have “breached its duty to defend…may not later rely on policy exclusions to escape its duty to indemnify the insured for a judgment against him.” This is the latest pronouncement from the New York Court of Appeals in K2 Inv. Group, et al. v. Am. Guar. & Liab. Ins. Co., No 106 (June 11, 2013). A copy of the opinion is available here. …
Read More Caution to Insurers – New Duty to Defend Opinion Issued by New York’s High Court

On June 11, 2013, the New York Times reported that New York Superintendent of Financial Services Benjamin Lawsky joined the debate on the increasingly-popular use of captives and Special Purpose Vehicles (“SPVs”) to reinsure “XXX and “AXXX” reserve redundancies. Mr. Lawsky believes that life insurers are engaging in “shadow insurance” by taking advantage of the laws in other jurisdictions to use what he calls “hollow assets” to support reserves that would traditionally not be approved in New York, such as parental guarantees and conditional letters of credit. …
Read More NY Times Reports Comments by NY Superintendent on Reinsurance Transactions within Life Insurance Industry

On June 11, 2013, the New York State Court of Appeals reinstated a policyholder’s claim for coverage for a $160 million “disgorgement” payment to the SEC. The decision, J.P. Morgan Securities v. Vigilant Insurance, No. 113 (June 11, 2013), is available here. …
Read More New York’s Highest Court Delivers Important Disgorgement Decision

This updates our May 17, 2013 blog post.

On June 3, 2013, Connecticut Governor Dannel Malloy signed into law HB 5072 (the “Bill”), restricting insurance companies and affiliated entities from influencing insureds into using specific automotive glass repair establishments. …
Read More UPDATE: Connecticut Enacts Auto Glass Repair Disclosure Bill

Late last month, Rep. Gary Miller, R-Calif., and Rep. Carolyn McCarthy, D-N.Y., introduced the “Insurance Capital and Accounting Standards Act of 2013” (H.R. 2140 or the “Act”) into the U.S. House of Representatives. The Act is in response to last year’s proposal by the Federal Reserve Board to apply certain capital requirements for financial institutions (i.e., Basel III global capital standards) to insurance companies that are part of depository holding companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). …
Read More U.S. House Introduces Legislation Regarding Capital Requirements For Insurers Subject To Dodd-Frank

On June 4, 2013, the Second Circuit Court of Appeals in Ali v. Federal Insurance Company, et al., No. 11-5000-cv, affirmed a lower court’s decision declaring that the coverage obligations of excess D&O insurers are not implicated until the underlying insurance has been exhausted by actual payment of loss, even when the underlying carriers are insolvent. The appeal was taken from the United States District Court for the Southern District of New York. …
Read More Second Circuit: Excess D&O Coverage Not Triggered Until Underlying Limits Exhausted by Actual Payment