Insurance & Reinsurance Alert: Reinsurer and Corporate Officer Held Liable Under Chapter 93A for Disavowing Reinsurance Agreement and “Stringing Along” the Cedent
3/9/2011
By Nicholas C. Cramb and Alec J. Zadek
In an important decision with implications for cedents and reinsurers alike, the District Court for the District of Massachusetts has held a reinsurer and its controlling officer liable under Chapter 93A (Massachusetts Unfair and Deceptive Trade Practices Act) for their bad faith disavowal of a reinsurance agreement. Trenwick Am. Reins. Corp. v. IRC, Inc. re-affirms the court’s prior holding in Seven Provinces that, where a “moving target” strategy is employed to coerce a favorable compromise of reinsurance obligations, it may constitute a violation of Chapter 93A.
