Excess and Surplus Lines

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In Columbia Casualty Co. v. Gordon Trucking Inc. et al., No. 09-CV-05441, 2010 WL 5141865 (N.D. Cal. Dec. 13, 2010), a truck owned by the insured was involved in a severe car accident. The insured had a $5 million primary policy, a $5 million first layer excess policy, a $20 million second layer excess policy, and a $20 million third layer excess policy. After its initial claim review, the first layer excess carrier told the insured that it did not believe its layer would be impacted by the underlying personal injury suit arising from the car accident. …
Read More Excess Insurer Required to Show Actual Prejudice to Avoid Paying Settlement it did not Consent to

We recently blogged about the Second Circuit’s decision in Arrowood Surplus Lines Ins. Co. v. Westport Ins. Corp., No. 10-cv-0397 (2d Cir. 2010), in which an appellate panel held that a reinsurer had no obligation to indemnify its cedent for losses outside the scope of the treaty at issue.  Click here to review a copy of that blog post.
Read More Second Circuit Denies Cedent’s Motion for a Rehearing in Follow the Fortunes Case

We previously blogged about the District of Connecticut’s decision in Arrowood Surplus Lines Ins. Co. v. Westport Ins. Corp., No. 08-cv-1393 (D. Conn. 2010), in which the court held that a reinsurer had no duty to honor the portion of a cedent’s loss that was outside the scope of the reinsurance agreement at issue.  In that case, Equity Residential argued that a policy issued to it by Arrowood Surplus Lines Insurance Company had a three-year period and sought coverage for losses that occurred from December 15, 1999 to December 15, 2002.
Read More Second Circuit Finds that Portion of Cedent’s Loss is Outside the Scope of the Reinsurance Agreement, Relieving Reinsurer of any Obligation to Follow the Fortunes

On September 30, 2010, the California Court of Appeal for the Second Appellate District affirmed a superior court ruling that California Constitution Section 28 taxes do not apply to surplus lines insurers.  Section 28 provides that insurers doing business in California are subject to a 2.35% premium tax. …
Read More California Appeals Court Affirms Ruling That Section 28 Tax Does Not Apply To Surplus Lines Insurers

The Massachusetts Division of Insurance (“MDOI”) recently amended its surplus lines laws to allow for the approval of alien unauthorized insurers in the state. Previously, Massachusetts required that alien surplus lines insurers maintain a trusteed surplus in the US of $20 million and file financial information on an annual basis following US accounting principles which effectively made obtaining surplus lines eligibility in the state prohibitive for alien insurers. …
Read More Massachusetts Amends Laws to Permit Alien Surplus Lines Insurers

Earlier this month, New Jersey Department of Bank and Insurance Commissioner Thomas Considine issued Bulletin No. 10-19 reminding surplus lines brokers that the $50 limitation remains in effect for fees charged by surplus lines brokers to originating brokers.  P.L. 2010, Chapter 42, which was enacted on July 6, 2010, amends N.J. Stat. Ann. § 17:22A-38b to allow for the Commissioner to set the fee limitation by regulation, however, it is not effective until October 1, 2010. …
Read More New Jersey Issues Reminder to Surplus Lines Brokers that the $50 Limitation for Fees Charged to Originating Brokers is Still in Effect

A public hearing on August 20, 2010 will explore the possibility of increasing insurance capacity in New York by easing access to unauthorized insurers. The New York State Insurance Department (“NYID”) is soliciting input from the public as it determines whether to revise eligible coverages on the Export List, as set forth in Insurance Department Regulation 41 (11 NYCRR 27). …
Read More New York Insurance Department to Hold Hearing on August 20, 2010 on Whether to Expand the Export List Under Regulation 41