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Vermont Governor Peter Shumlin has signed H. 198, titled the Legacy Insurance Management Act (“LIMA”), in an effort to attract new domestic insurance companies dedicated to run-off business in Vermont. LIMA allows for the formation of Vermont-domiciled insurance companies whose sole purpose is to acquire closed blocks of P&C commercial insurance and reinsurance business from non-admitted companies. …
Read More Vermont Enacts “Legacy Insurance Management Act” for Commercial Run-Off Business

New York’s highest court has reversed itself on an important duty to defend opinion. In K2 Inv. Group, et al. v. Am. Guar. & Liab. Ins. Co., (Feb. 18, 2014), available here, the Court of Appeals held that an insurer which breaches its duty to defend does not lose its right to rely on policy exclusions as a defense to indemnity. …
Read More New York’s Highest Court Holds that Breach of Duty to Defend does not Prevent Insurer from Relying on Policy Exclusions to Dispute Duty to Indemnify

A federal district court in Washington handed Validus Reinsurance a major win on Wednesday, declaring that the IRS has no authority to assess excise tax on retrocessions. The decision in Validus Reinsurance, Ltd. v. United States of America, No. 13-0109 (D.D.C. Feb. 5, 2014), is available here. …
Read More Validus Wins Round One: Retrocessions Not Taxable Under 26 USC § 4371(3)

This past Friday, the Texas Supreme Court gave general liability insurers pointed guidance about what constitutes an “assumption of liability” for purposes of a contractual liability exclusion. …
Read More Texas High Court Rules That Contractor Does Not “Assume Liability” When Agreeing To Perform Work In Good & Workmanlike Manner

On December 18, 2013, the National Association of Insurance Commissioners (NAIC) approved four jurisdictions as “Conditional Qualified Jurisdictions,” meeting its year-end goal for expedited review of certain jurisdictions. The four jurisdictions are Bermuda, Germany, Switzerland and the United Kingdom.
Read More NAIC: Bermuda, Germany, Switzerland and UK Now Qualified for Reduced Collateral Requirements

While interpreting a policy governed by Illinois law, the Seventh Circuit found ambiguity based on two “plausible” interpretations and found coverage, a finding based on language that appears to have been construed in isolation and without regard to the purpose or pricing of the policy. That case was National Casualty Co. v. White Mountains Reinsurance Co., no. 11-3158 (7th Cir. Oct. 30, 2013).
Read More Based on a Doubtful “Plausible” Reading of an Insurance Policy, the Seventh Circuit Finds Coverage

On 12 December 2013, the European Insurance and Occupational Pensions Authority (EIOPA) published its second Half-Year Financial Stability Report for 2013 (available here). The risk environment described in the second Half-Year report is broadly the same as the environment described in the first Half-Year report, published in July.
Read More EU: EIOPA publishes second Half-Yearly Financial Stability Report for 2013; comprehensive stress tests on the way