Goldberg Segalla’s Reinsurance Review provides timely summaries of and access to the latest reinsurance law developments worldwide, and is published monthly. Cases are organized by court and date. In addition, it provides the latest information regarding news in the insurance and reinsurance industries. Reinsurance Review is the collaborative effort of Goldberg Segalla LLP’s Global Insurance Services Practice Group, as is its blog The Insurance and Reinsurance Report. Goldberg Segalla’s Global Insurance Service Group is comprised of over 25 attorneys throughout 10 offices in the firm’s four states (New York, New Jersey, Connecticut, and Pennsylvania). The Global Insurance Services Group routinely handles matter of national and international importance for both domestic and foreign insurers, cedents, and reinsurers. This includes: a comprehensive audits, policy reviews, regulatory advice, positioning dispute for resolution at the business level (either through interim funding or non-waiver agreements), negotiations among counsel, mediation or fully-involved arbitration or litigation.
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IN THIS MONTH’S EDITION:
UK Highest Court Fails to Apply the “Joint and Several Liability” Doctrine in the Reinsurance Context
Eighth Circuit Reverses District Court and Precludes a Non-Signatory to an Agreement the Ability to Invoke the Arbitration Clause
Third Circuit Rejects “Virtual Privity” Doctrine in the Insurance/Arbitration Context
District Court Awards Restitutionary Interest in the Errors and Omissions Reinsurance Context
District Court Modifies Own Order and Allows Reinsurer to Assert Privilege in Reinsurance Dispute
District Court Denies Request for New Arbitration Panel in Allocation Dispute
SUPREME COURT DECISIONS
There are no cases published this month.
UNITED STATES CIRCUIT COURT DECISIONS
DONALDSON CO. V. BURROUGHS DIESEL, INC.
(CIVIL ACTION NO.: 08-2705 – JULY 9, 2009)
Eighth Circuit Reverses District Court and Determines a Non-Signatory to an Agreement Cannot Invoke Arbitration Agreement
In 1999, Burroughs Diesel, Inc. (“Burroughs”), a car distributor, entered into an agreement with its manufacturer outlining the number of cars that were to be distributed. The agreement included an arbitration clause and a choice of law provision. The arbitration clause stated that:
Any controversy or claim arising out of or in connection with this Agreement, its construction, interpretation, effect, performance, non-performance, termination, or consequences thereof, or any transaction contemplated hereby, however characterized as a matter of law (whether in contract, tort or otherwise) … shall be settled by arbitration in St. Louis County, Missouri …
The agreement further provided that it:
Shall be governed by and construed in accordance with the laws of the state in which Dealer’s principal place of business, as designated in Paragraph 6 hereof, is located, and such laws shall be applied and control any arbitration conducted …
Over the course of this agreement, Donaldson Co. (“Donaldson”) provided several of the parts used in the vehicles. Based on alleged engines failures, a lawsuit was filed against Burroughs, Donaldson and the manufacturer in a separate action. Burroughs asserted cross-claims against Donaldson and the manufacturer for negligence; breach of fiduciary duty; breach of good faith and fair dealing; fraudulent misrepresentation; fraudulent concealment; and implied warrant of fitness for a particular purpose. Donaldson raised an affirmative defense against the cross-claim stating “if there is an arbitration agreement between [Burroughs and manufacturer] it is barred by that agreement and the [cross-claims] should be dismissed and all issues should be resolved by arbitration.” Donaldson then commenced the instant action to compel the parties to arbitrate. The District Court of Missouri agreed with Donaldson’s assertion that a non-party can compel arbitration for the cross-claims under these circumstances. The District Court also determined that the appropriate choice of law to resolve this issue was Mississippi Law, not federal law.
The Eighth Circuit reversed the district court’s decision on several points. Initially, the Circuit Court determined that the Federal Arbitration Act applied because it “creates a body of federal substantive law or arbitrability, applicable to any arbitration agreement within the coverage of the Act.” As such, the District Court erred in deciding that Mississippi Law applied to this issue. In applying the FAA, the Eighth Circuit concluded that Donaldson, as a non-signatory, cannot compel arbitration in this context. Applying past legal precedent, the court concluded that a non-signatory could enforce the arbitration agreement only under a few circumstances. First, a third-party can invoke the arbitration clause if the parties had a close-relationship. The court concluded that in order to determine a close-party relationship it would typically fall within the “agency” or “subsidiary” context. Donaldson, as a mere supplier, did not qualify as having a close- relationship to warrant applying that exception.
Donaldson’s second argument centered on whether the claims asserted in the lawsuit are “intertwined” with the agreement. Here, the court deduced that the cross-claims involved in the lawsuit did not involve the agreement but rather the conduct of each of the defendants. As such the Third Circuit reversed the District Court’s decision and allowed the cross-claims to continue in litigation.
IMPACT (REINSURER/CEDENT): In our June edition of Reinsurance Review, we addressed the Supreme Court’s Decision in Arthur Andersen v. Wayne Carlisle, where it allowed non-signatories to an arbitration agreement the ability to invoke the Federal Arbitration Act in an effort to expand the scope of arbitration agreements. This decision, though not directly on point, fuels the debate over whether the scope of the Federal Arbitration Act remains unsettled.
NATIONWIDE MUTUAL FIRE INSURANCE CO. V. GEORGE V. HAMILTON, INC.
(CIVIL ACTION NO.: 08-4733 – JULY 6, 2009)
Third Circuit Reverses District Court by Rejecting the “Virtual Privity Doctrine” in Arbitration Context.
Nationwide Mutual Fire Insurance Co. (“Nationwide”) appealed the Western District Court of Pennsylvania’s decision denying its motion to compel arbitration. Nationwide previously issued a liability policy to George V. Hamilton, Inc. (“Hamilton”) during the 1980’s to cover any liabilities, including asbestos claims. During the following years, several underlying asbestos lawsuits were filed against the defendant. Nationwide and the other insurers entered into a Settlement Agreement to resolve the underlying claims on Hamilton’s behalf. Shortly after the Settlement Agreement was finalized and executed by all parties, Nationwide indicated that it exhausted its policy and therefore would not finance its portion of the Settlement Agreement going forward. The Agreement contained an Arbitration Clause in which “any and all disputes arising out of, or relating to this Agreement, shall be decided by nonjudical arbitration which shall be binding on the parties …”
As the claims continued to accrue, one of the third-party insurers, Pennsylvania Manufacturers' Association Insurance Company (“PMA”), filed a declaratory judgment against Hamilton and other contributing insurance carriers that were parties to the Settlement Agreement. In that declaratory judgment action, PMA alleged that it exhausted its policy limit associated under various umbrella policies and was not responsible for any further payments. Nationwide was not named in the declaratory judgment. The court determined that PMA was entitled to absolve itself from contributing to the Settlement Agreement. The court, however, in attempting to strike a balance between the carriers’ interests and Hamilton’s interests gave Hamilton the ability to withdraw from the Settlement Agreement. In 2007, Hamilton notified the third-party carriers, including PMA, of its intention to withdraw from the Settlement Agreement. As a result, Hamilton tendered two new asbestos related claims to Nationwide. Nationwide filed this action asserting that this issue needed to be resolved pursuant to the Arbitration Agreement of the Settlement Agreement. Hamilton naturally disagreed stating that the arbitration provision was no longer valid as a result of the prior ruling in the PMA action.
The District Court concluded that Nationwide was estopped from asserting the issue of arbitration as the Settlement Agreement was previously decided in the PMA action. The court’s logic was that Nationwide’s interests were identical to PMA and the other carriers under the “virtual privity” doctrine, which precludes a non-party with identical interests to a party in an action from relitigating an issue. Therefore, Nationwide was precluded from raising the arbitration issue in this action as it was decided in the PMA action. Nationwide appealed the court’s decision.
The Third Circuit began its analysis by reviewing collateral estoppel law as it applies to insurance carriers. The court challenged the lower court’s contention that plaintiff was precluded due to the fact that there was privity between the plaintiff and the third-party insurers in the prior legal proceeding. The court concluded the “virtual representation” version of privity as the district court referenced was not appropriate in this context. As a result, the court reasoned that “binding [plaintiff] to the order denying arbitration in the [other legal proceeding] either under the guise of virtual representation or adequate representation, would expand the scope of preclusion law in contravention of the deep-rooted historic tradition that everyone should have his own day in court.” The court remanded the district court’s order to consider the merits of plaintiff’s petition to compel arbitration.
IMPACT (ARBITRATION): The Third Circuit’s decision rejecting the “virtual privity” doctrine in the insurance/reinsurance context demonstrates that each party to a settlement agreement has a separate right to assert the provisions contained therein. That is especially true when deciding issues involving arbitration.
UNITED STATES DISTRICT COURT DECISIONS
EASTERN DISTRICT OF PENNSYLVANIA
UNITED NATIONAL INS. CO. V. AON LTD
(CIVIL ACTION NO.: 04-539, July 24, 2009)
District Court Applies Pre-Judgment Interest To Multi-Million Dollar Verdict in an Errors and Omissions Reinsurance Dispute
Insurers commenced this action against their broker alleging that there were several material misrepresentations made during the course of securing reinsurance policies. The insurers maintained that the reinsurance policies the broker secured on their behalf were overly excessive.
When losses began to accrue regarding the insurers’ program, the reinsurer requested arbitration in an effort to rescind its policies. In that action, the reinsurers ironically alleged that both the insurers and the broker misled them in procuring reinsurance. After a lengthy hearing, an arbitration panel granted the reinsurer partial rescission and ordered that the reinsurer return the premiums. The arbitration panel determined that the reinsurer “no longer bears any financial responsibility for claims by insureds that arose under the rescinded portion of the agreement.” The broker was not a party to the arbitration.
In light of the ruling, the insurers commenced this lawsuit against the broker for indemnity and/or contribution for the non-reinsured portion of the claims due to its alleged negligent misrepresentations. In addition, the insurers sought economic losses “attributable from the Arbitration including attorneys’ fees and expenses incurred in the earlier action.” After a jury trial, the insurers were awarded $16,871,596.00 in losses and $7,000,530.00 in attorneys’ fees and costs associated with the arbitration.
The insurers moved for a motion to amend the judgment to reflect pre-judgment interest. The broker moved for a new trial. The court concluded it can apply pre-judgment interest to the restitutionary theories of recovery because the court found evidence in the record of the broker’s negligence in securing the policies. As a result, the court increased the award to $32.2 million reflecting the information in the record. Accordingly, the court rejected the broker’s request for a new trial.
IMPACT (REINSURER): This case illustrates that courts can apply pre-judgment interest in the reinsurance context without any express information contained in the contract to do so. Here, the court made clear its ability to apply pre-judgment interest to restitutionary theories of recovery in the insurance context.
MIDDLE DISTRICT OF GEORGIA
INTERNATIONAL FIDELITY INS. CO. V. BMC CONTRACTORS, INC.
(CIVIL ACTION NO.: 08-7003 July 14, 2009)
Arbitration Clause Enforced Where Delay In Request For Arbitration Not Caused By Party Requesting Arbitration
This case involved a claim for breach of contract and negligence claims arising from several contractor defendants’ alleged defaults under respective construction contracts. Specifically, one of the contractor defendants, BMC, entered into a subcontract with defendant contractor, Star, regarding pre-engineering and fabricating metal buildings. The subcontract contained an arbitration clause. A question arose as to whether BMC waived its right to enforce the arbitration clause against cross-claims filed by Star when BMC did not request arbitration until five months after Star obtained a default judgment.
The District Court held that the arbitration clause was enforceable and BMC did not waive its right to arbitration because BMC was not the cause of the delay. BMC was not aware of the cross-claims until Star filed a motion for default and had not substantially participated in the litigation of the cross-claims. In addition, the District Court found that no discovery had been conducted on the cross-claims, the demand for arbitration was made within a reasonable time and BMC’s conduct did not rise to the level of waiver. Furthermore, any prejudice to Star was outweighed by the District Court’s finding that BMC demanded arbitration in a reasonable time coupled with the strong policy in favor of arbitration.
IMPACT (ARBITRATION): The case demonstrates the considerations a court will examine to determine if a party waived its right to arbitrate. As seen here, courts will look at a party’s conduct, the time elapsed, the effect on ongoing proceedings, prejudice and public policy in favor of arbitration.
SOUTHERN DISTRICT OF NEW YORK
AIU INSURANCE CO. V. TIG INSURANCE CO.
(CIVIL ACTION NO.: 07-Civ-7052, July 8, 2009)
District Court Grants Reinsurer’s Reconsideration and Allows Several Documents to be Withheld
In its prior August 2008 decision, the District Court determined that the reinsurer must disclose several of the communications between the reinsurer and its counsel regarding issues in the underlying action. In that decision, the District Court concluded that the communications were not privileged. The reinsurer moved for reconsideration of these communications alleging that the court overlooked certain factual matters contained within the disputed documents. In its motion, the reinsurer submitted several new affidavits attempting to place the documents into context. The cedent opposed the motion citing that the prior decision was proper given that it narrowed the reinsurer’s claim of privilege.
The documents at issue were several correspondence, ranging from handwritten notes to emails that were issued concerning a dispute that was acknowledged by both the cedent and reinsurer. Upon re-examination, the court granted reconsideration claiming that such information would fall within the “attorney work-product doctrine.” The court reasoned that the documents assessed the various choice-of-law concerns in the agreements that are at issue in this action. Moreover, the court reversed itself claiming that the work-product doctrine was extended to reinsurers in these types of conflicts.
IMPACT (ARBITRATION): The issue of a reinsurer asserting privilege is not new. There appears to be a rise in these types of disputes as a natural outcome of the overall increase in reinsurance arbitration and/or litigation. This case illustrates (by modifying the earlier decision) that courts and arbitration panels alike are having a difficult time determining the time and scope in which a reinsurer can assert a privilege.
SOUTHERN DISTRICT OF NEW YORK
IN THE MATTER OF THE PETITION OF INSURANCE COMPANY OF NORTH AMERICA
(CIVIL ACTION NO.: 08-7003, June 30, 2009)
In Reinsurance Allocation Dispute, District Court Orders Parties to Proceed with Original Arbitration Panel
The underlying actions involved several environmental claims which the cedent settled. The cedent, in turn, submitted its bills to the reinsurer for reimbursement. The reinsurer refused claiming that the cedent did not accurately represent the scope of the risk. As a result of the reinsurer’s refusal, the cedent demanded arbitration.
During the course of the arbitration, the cedent was awarded summary judgment on the basis that its allocation determination was not unreasonable with respect to two underlying actions. With respect to the other actions, the arbitration panel ordered discovery to determine whether the cedent acted in bad faith with respect to its allocation. During the course of the discovery, an arbitrator withdrew citing health reasons.
The cedent requested that the reinsurer appoint another arbitrator and proceed forward with the existing arbitration but the reinsurer refused citing that a new arbitration panel must be organized. In a separate ruling, the district court agreed with the reinsurer citing the well-established rule that when an arbitrator dies, a new arbitration panel must be commenced. New evidence submitted by the cedent, however, indicated that the arbitrator was feeling better and wished to re-engage in his profession. In fact, the arbitrator contacted both parties to inquire about the litigation. As such, the court concluded, over the reinsurer’s objections, that the evidence submitted about the arbitrator’s health was admissible in determining whether to modify its prior ruling. Based on the newly presented information, the court appointed the arbitrator to his position on the panel pursuant to 9 U.S.C. §5.
IMPACT (ARBITRATION): The court relied heavily on public policy considerations in favor of parties utilizing arbitration as a method of dispute resolution. Here, while the letter of the law appeared to favor the reinsurer’s request for a new panel, the court nevertheless applied a practical public policy analysis by reappointing the arbitrator and allowing the parties to continue with the arbitration.
UNITED STATES STATE COURT DECISIONS
There are no cases published this month.
UNITED KINGDOM CASES
LEXINGTON INSURANCE CO. V. WASA INTERNATIONAL INSURANCE CO. LTD. ET AL
 UKHL 40 (July 30, 2009)
UK High Court Fails to Apply the “Joint and Several Liability” Doctrine in the Reinsurance Context and Permits the Reinsurer to Reject Costs for the Entire Clean Up
The central issue before the United Kingdom’s High Court in this action is whether a reinsurer is responsible for the full amount of the cedent’s costs associated with a court ordered environmental clean up under the theory of “joint and several liability.” The pollution cited to in the underlying action occurred over several decades, but the reinsurance contract covered only a portion of that timeframe.
In order to examine this issue, the court first explored the terms and conditions of the reinsurance policy itself. The reinsurance policy was issued in 1977 and covered the cedent’s business operations for 36 months. The policy, however, did not have an express choice of law provision. While conceding that United States law was referred to in the policy, the court determined that United Kingdom law would apply to the construction of the reinsurance contract.
The court then examined the follow the fortunes clause to determine if the language contained therein would force the reinsurer to pay for the entire amount of the clean up costs. In order to examine the scope of the follow the fortunes clause, the court then analyzed the underlying decision which found the cedent liable. In the underlying action, the United States Environmental Protection Agency (“EPA”) demanded that the original policyholder clean up a polluted site. The original policyholder then commenced an action with respect to the cedent and other insurance carriers regarding their respective coverage obligations. The Supreme Court of the State of Washington determined that the cedent was “joint and severally” liable for the all clean up costs of the polluted site “regardless of whether or not that pollution damage actually occurred during the policy period.”
The court made the distinction that the “joint and several” doctrine was not established in United States cases until after the reinsurance policy was issued. As such, the court rejected imposing “joint and several” liability upon the reinsurer. The court determined that if it ruled in favor of the cedent and forced the reinsurer to pay the entire clean up costs, it “would impose upon reinsurers a liability for which, under the law applicable to the reinsurance, they did not bargain.”
As Lord Mance concluded if the Supreme Court of the State of Washington’s interpretation was correct, “it would have been tantamount to saying that reinsurers must have incurred liability (in practice probably up to the reinsurance limits) as soon as they wrote the reinsurance.” According to Wasa’s Counsel “[t]hat would have been monstrously unjust and plainly not the intention of the contract.”
IMPACT (REINSURER/CEDENT): The significance of this decision cannot be understated. The court effectively placed the responsibility for paying the bulk of the 103 million dollars in property damages with the cedent despite the fact there was a reinsurance policy with a follow the fortunes clause. Clearly, the UK Court effectively rejected applying the “joint and several” doctrine to a facultative reinsurance policy unless the parties specifically articulated the risk. This ruling will have broad impact in future environmental or asbestos-related claims facing the same issue.
DORNOCH LTD ET AL V. WESTIMINSTER INTERNATIONAL BV ET AL
 EWHC 889
UK High Court Declares That The Sale of The Insured’s Ship was within the Scope of the Insolvency Act of 1986
The insured owned and maintained a large commercial ship which was involved in an accident off the coast of China. The ship was declared a total loss for insurance coverage purposes. The ship had several layers of primary, excess insurance and reinsurance coverage. The primary policy was up to 5 million dollars per occurrence with excess coverage exceeding 150 million dollars. The damaged ship was transported to Thailand where it remained during the course of the lawsuit. A dispute, however, arose between several of the insurers over the cost and value of the ship as it was on the verge of being sold. Several of the insurers, who exhausted their policies, determined that they had ownership rights and attempted to sell the ship on the open market. Other insurers requested that the court preclude such a sale. The insurers in favor of the sale argued that they were entitled to sell the ship because “the underwriters had by the time of sale exercised their right, under section 63(1) and/or 79(1) of the Marine Insurance Act of 1906.”
The court held that Thailand law applied to this lawsuit given the location of the vessel. As a result, pursuant to Thai law, none of the insurers obtained any propriety rights to the vessel. The court also concluded that given this lawsuit falls squarely within the provision of the Insolvency Act of 1986, the purported sale of the vessel should be set aside. The court made that determination on the basis that the jurisdiction of the Insolvency Act contained no territorial limit. So regardless of whether it was Thai law or United Kingdom law, the Act applied. Given that the insurance policy was governed by the law of the United Kingdom, it contained the necessary connection to allow the court to proceed and make its determination.
IMPACT (REINSURER/CEDENT): This case highlights a damaged vessel dispute which is often the subject of reinsurance arbitration. The decision provides guidance to future panels concerning the application of laws of the United Kingdom to policies governed there.
RECENT FILINGS OF INTEREST
COOK COUNTY, ILLINOIS
MICHAEL T. McRAITH V. AMERICAN RE-INSURANCE CO. ET AL
(CIVIL ACTION NO.: 09-CH-18191, JULY 9, 2009)
Court-Affirmed Rehabilitator Commences Action against Reinsurers for Settlement Coverage
Plaintiff, acting in his capacity as the statutory and court-affirmed rehabilitator of Centuar Insurance Company, filed a lawsuit against its reinsurers for failure to pay reinsurance proceeds. Plaintiff alleges that Centuar Insurance Co. issued insurance policies covering the risks involved in the underlying action and secured several facultative reinsurance policies for the same policies. According to the terms and conditions of the reinsurance agreements, specifically the loss settlement provision, all settlements are binding on the reinsurers and, as such, the reinsurers are obligated to pay those sums.
According to the complaint, plaintiff alleges the reinsurers failed to compensate Centaur under the reinsurance policy despite the fact that it provided the necessary proof of claim. The reinsurers, in turn, argued that they “lacked sufficient claims data and analysis to support the request for payment under the Certificates of Reinsurance they issued to Centuar.” As a result, the plaintiff requests declaratory relief stating that reinsurers are obligated “to indemnify Centaur for its share of the Settlement amount under the Certificates of Reinsurance they issued to Centaur.” In addition, plaintiff seeks “interest from the date of the notice of the settlement amount and request for payment of its share of the Settlement amount and on its proportion of allocated loss expense.”
OTHER NEWS AND NOTES
Senator Neal Re-Introduces Bill Which Would Close Tax Advantages to Foreign Reinsurers That Export Premiums
Last week, Senator Neal delivered a speech to the United States Congress as he reintroduced his bill which would “eliminate” any tax loopholes provided to overseas reinsurers who export United States premiums. It is expected that this bill will be discussed after the August recess.
New York Insurance Department and China Reach Insurance Agreement
The New York State Insurance Department announced on July 30, 2009 that it reached a memorandum of understanding with China Insurance Regulatory Commission regarding uniform regulatory standards applying consistently in New York and China. As one representative from the New York Insurance Department stated “[t]he regulatory agencies of China and New York are responsible for ensuring the prudent conduct of insurer obligations on the part of many of the world’s largest insurance businesses.”
IIWG Issued Report on Challenges Facing the Insurance Industry
The Insurance Industry Working Group (IIWG) issued its report on July 27, 2009 regarding the upcoming challenges the insurance industry face in today’s global market. Among some of the more serious challenges insurance carriers face is consumer confidence, allowing transparency, simplicity and access for consumers as well as greater cooperation with government officials to better manage risks.
Recently Proposed United States Treasury Bill Includes The Creation of the Office of National Insurance
The United States Treasury Department introduced a bill which includes the creation of the Office of National Insurance (ONI). This treasury bill, while similar to the bill introduced in the House of Representatives in April, provides the newly created office with narrow but strong authority over solvency and international issues. The Office of National Insurance was part of a larger bill regarding providing greater financial service oversight.
U.S. Thunderstorm Losses Reverberate Through Insurance and Reinsurance Industry
According information released recently, insurers have paid 6.1 billion dollars in claims for thunderstorm losses so far this year and the total claims for the year has been estimated to exceed 9.0 billion dollars. The numbers according to Insurance Information Institute marks the 5th highest level since 1980. In the United States, Georgia, Tennessee, Texas and Arkansas incurred the majority of the losses.
An interesting trend regarding the rise of these claims is that they appear to be caused by thunderstorms and lightning hitting homes that contained several pieces of electronic equipment. The cost of homeowners’ damage claims due to lightning strikes has increased nearly 15 percent from 2007 to 2008 and nearly 50 percent from 2004 to 2008.
United States House of Representatives Discusses Insurance Bill that Will Limit Tax Exposure for Small Insurance Carriers
Representatives Earl Pomeroy and Paul Ryan introduced legislation aimed at amending the Internal Revenue Code for smaller insurance carriers. The proposed bill will raise the alternative tax liability limitation for small insurers to approximately 2 million dollars from the current 1.2 million dollar standard.
The purpose is to provide more options for smaller insurers to make them more competitive in the marketplace as they would have the flexibility of still being eligible to be taxed fully or to be taxed on their net investment income.
The Association of Bermuda Insurers and Reinsurers Backs Global Climate Report
The Association of Bermuda Insurers and Reinsurers (ABIR) joined forces with the Sierra Club, the National Wildlife Federation and Ceres in sending a formal response to United States Senator Barbara Boxer’s endorsement of the Geneva Association’s Report on climate change. The report recommends steps that the insurance industry can take to address the potential adverse impact of climate change, including adopting incentive policies for insureds who improve energy efficiency.
Rate of Return for United States P&C Carriers was 3.9 Percent for 2008
In a recent publication issued by the Reinsurance Association of America, United States Property and Casualty insurance carriers made an average return on equity of 3.9 percent. This revelation is seen as a positive indicator in the industry given the overall negative news coming from the housing and financial markets. In fact, the Reinsurance Association of America’s findings demonstrate an overall healthy outlook for the industry in 2009 and 2010.
United States House of Representatives Pass Bill Extending Benefits under the National Flood Insurance Program
In early July, Barney Frank, U.S. Housing Financial Services Committee Chairman, introduced legislation that would extend the National Flood Insurance Program until March 31, 2010. The National Flood Insurance Program was created to extend federal insurance coverage and allow banking institutions the ability to lease foreclosed properties.
On July 29, 2009, the House of Representatives voted in favor of the bill and agreed to provide 200 million to extend the program.