Editor, Mealey's Litigation Reports: Reinsurance and Insurance Insolvency

In a case worth millions of dollars, an English court ruled, again, that a “follow the settlements” provision does not entitle a cedent to coverage when additional terms in the reinsurance contract narrow the scope of coverage.

Justice Andrew Smith of the English High Court ruled that a reinsurer has no duty to pay toward the settlement of a claim for damages to certain oil refinery equipment owned by El Paso Energy Corp.  The damaged equipment was not on the reinsurance slip's list of reinsured objects.

But the justice further ruled that the reinsurer must reimburse its cedent for the settlement of a related claim for damage to a reactor because an “explosion” exclusion does not bar coverage.  

Further coverage in the Sept. 21 issue of Mealey's Reinsurance.