There are lots of cases discussing the production of reinsurance contracts and reinsurance communications in insurance coverage disputes. Generally, the answer depends on the specific facts of the case. Recently, in a coverage case based on headline events, a New York motion court upheld a referee’s order for production of both reinsurance contracts and reinsurance communications.
In Discover Property & Casualty Co. v. National Football League, No. 652933/2012, 2019 N.Y. Misc. LEXIS 5332 (N.Y. Sup. Ct., N.Y. Co. Oct. 4, 2019), a referee to supervise disclosure under CPLR 3104 in this insurance coverage dispute issued an order directing the insurers to produce their reinsurance contracts and communications between the insurers and their reinsurers about the underlying claim. The underlying claim is the huge settlement entered into between the NFL and former NFL players over concussion and other related injuries, including CTE and MTBI (mild traumatic brain injury). In ordering production, the referee held the production of the reinsurance contracts was “seemingly mandated by” CPLR 3101(f). 3101(f) is the provision in New York’s civil procedure law providing that “[a] party may obtain discovery of the existence and contents of any insurance agreement under which any person carrying on an insurance business may be liable to satisfy part or all of a judgment which may be entered in the action or to indemnify or reimburse for payments made to satisfy the judgment.” The referee also held that reinsurance communications were discoverable to the extent that a carrier has asserted failure to disclose defenses or is targeted by a bad faith claim.
In affirming the referee on these issues (there were other discovery issues as well), the motion court rejected the carriers’ argument that the reinsurance information was confidential and proprietary information not relevant to the case. The motion court agreed with the referee that the plain language of CPLR 3101(f) meant that the reinsurance agreements should be produced (the slip decision says 3102(f), but the court meant 3101(f)). The court also stated that because this was an insurance coverage case, “the insurers’ communications with their reinsurers is reasonably calculated to lead to information relevant to (1) whether the Insurers have handled the NFL parties’ claims in good faith and (2) whether the Insurers lacked material information regarding the insured risks.” The court also noted that the allegations of bad faith by the NFL against the insurers for refusing to consent to the class action settlement was a basis for producing the reinsurance communications.
This case breaks no new ground and fits neatly within the trend in the past several years of courts compelling the production of reinsurance contracts and communications in coverage disputes where bad faith allegations exist.