Whether you’re the reinsurer or the policyholder, reinsurance disputes can be rather complicated. Disputes can vary substantially depending on the circumstances — whether the reinsurance method is facultative or treaty, for example, and whether the reinsurance is proportional or non-proportional. Given the inherently dynamic and complex nature of reinsurance disputes, effective litigation demands a multidisciplinary team of attorneys that are capable of working closely with multiple, disparate stakeholders in both an advisory and litigious capacity.
At Berg Plummer Johnson & Raval, LLP, we represent policyholders in a variety of reinsurance-related disputes and understand the strategies typically employed during negotiations and in litigation.
Concerns About Bad Faith
In Texas, reinsurers have a fundamental duty to act in good faith with regard to their policyholders. If they fail to act in good faith, then they may be exposed to liability. Despite the fact that reinsurance involves parties that are reasonably well-informed on the underlying subject matter of the contract, there are still instances of wrongful conduct and bad faith in the reinsurance context.
Bad faith concerns include, but are not necessarily limited, to:
- Wrongful denial of claims relating to a particularized loss or losses
- Unreasonable delay in processing claims
- Failure to disclose pertinent information relating to the coverage plan
- Misrepresentation and/or fraud
- And more
Reinsurance coverage is generally sought when the ceding company has not sufficiently covered their risks, or with intent of avoiding excess liability in the event of a substantial and unexpected claim event, such as a natural disaster. As such, bad faith denial or delay can put a disproportionate and damaging amount of financial pressure on the policyholder in a vulnerable time.
Representation in an Advisory Capacity
We provide both litigation-based services and proactive advisory services. When negotiating and executing a reinsurance contract, it’s critical that you consult with an experienced team of attorneys that have successfully litigated reinsurance disputes. Litigators are particularly valuable in a proactive, advisory capacity when handling complicated coverage plans such as reinsurance, as you can minimize the risk of a dispute later on.
Most reinsurance is shared between many different reinsurers (the lead reinsurer and the following reinsurers), or the burden is placed on a single reinsurer who then enters into agreements with additional reinsurers separately. As such, given the large number of different insurance “touchpoints,” there can be issues with solvency in the event of a major claim situation (such as a natural disaster) where not all of the reinsurers were well-prepared.
If your company has suffered losses in a reinsurance dispute, you may be entitled to recover damages connected to litigation of that dispute. Effective litigation of reinsurance issues requires the skilled assistance of a team of attorneys that have multidisciplinary experience as litigators and negotiators, given that reinsurance issues often interface with a host of other seemingly loosely-related concerns, both legal and commercial in nature.
At our firm, our reinsurance attorneys bring together several decades of combined experience representing reinsurers in litigation. We have negotiated favorable resolutions to wide-ranging reinsurance issues, including but not limited to bad faith and fraud, fiduciary violations, unfair claim settlement, failure to disclose, and more. We are committed to securing positive results for our clients, and to that end, we provide end-to-end services, from advisory services before a dispute arises to aggressive advocacy in the event of trial litigation.
Every client tends to have different budgetary limitations and strategic objectives. Here at Berg Plummer Johnson & Raval, LLP, we recognize the value in providing unique, customized fee arrangements to suit their particular circumstances. To that end, we work with clients from the beginning of the client engagement process to ensure that the fee arrangement is closely integrated with their goals.