Reinsured is Not Entitled to Tort Damages for Reinsurer's Alleged Breach of Implied Covenant of Good Faith and Fair Dealing

On April 21, 2008, a district court decision in California, captioned California Joint Powers Insurance v. Munich Reinsurance America, Inc. addressed for the first time the issue of whether a reinsured can seek tort damages against a reinsurer for breach of the covenant of good faith and fair dealing. The District Court declined to allow a reinsured to seek such relief and dismissed that cause of action against the reinsurer. The Court concluded that a reinsured, unlike typical insureds, is not seeking peace of mind or security in obtaining an insurance policy but rather it is seeking the ability to write more policies than its reserves would otherwise allow. For more information regarding this decision, contact Jeffrey Kingsley.