Reinsurer allegedly refuses to pay for asbestos coverage

By Heather Isringhausen Gvillo | Oct 21, 2014

HARTFORD, Conn. (Legal Newsline) – A reinsurance company allegedly refuses to pay five separate billing claims from an insurance company covering asbestos lawsuits.

Travelers Casualty and Surety Company filed a lawsuit on Oct. 13 in the U.S. District Court for the District of Connecticut against Excalibur Reinsurance Company for alleged breach of contract.

Abraham A. Ribicoff

Travelers claims it issued an umbrella insurance policy to Zurn Industries, Inc. between April 1984 and April 1985.

During that time, several individuals filed claims against Zurn alleging they were injured from exposure to the company’s asbestos-containing products.

As a result, Zurn filed claims with Travelers seeking insurance coverage under its policy for the asbestos claims.

Zurn sued Travelers for the coverage and in 2003 resolved the dispute through a confidential settlement agreement and companion cost sharing agreement.  

According to the settlement, Travelers agreed to make future payments to Zurn or on behalf of Zurn “from time to time” under the policy, which it has been doing for about 11 years, the complaint explains.

However, Travelers claims it reinsured the Zurn policy with Excalibur when the reinsurer subscribed to three certificates of facultative reinsurance.

“In the Zurn facultative certificates, Excalibur promised to pay Travelers Casualty’s reinsurance claims promptly,” the complaint states. “Excalibur also agreed to follow Travelers Casualty’s fortunes, and not to attempt to avoid payment by second-guessing Travelers Casualty’s claims decision.”

Travelers describes reinsurance as insurance for insurance companies. More specifically, facultative reinsurance is a contract that reinsures a single policy or risk.

Travelers alleges that when it made one of its occasional payments to Zurn, it subsequently submitted a corresponding reinsurance billing to Excalibur.

The periodic billings were initially paid, the complaint states. Over time, however, Excalibur allegedly stopped paying the billings without providing an explanation or excuse.

In fact, Travelers claims Excalibur’s initial payments were made after “substantial delay” in many cases.

In 2012, Travelers sued Excalibur in an effort to collect more than a year’s worth of accumulated billings. By 2013, Travelers sued Excalibur two additional times when the reinsurer allegedly refused to pay two additional set of billings. Then Travelers sued Excalibur a fourth time this year when it refused to pay yet another set of billings.

“In all four cases, Excalibur paid the billings in full upon being sued, without ever explaining why it did not pay them in the first place,” the complaint states.

This specific lawsuit arises out of a fifth refusal to pay that occurred in September, in which the billings totaled roughly $112,855.

Travelers alleges Excalibur breached the reinsurance contract for allegedly refusing to pay required claims.

“Moreover, Excalibur has never objected to Travelers’ billings, even though any reasonable period for doing so has passed. Indeed, Excalibur not only has failed to object to Travelers’ claims; it has paid many similar claims in the past without objection,” Travelers argues.

The plaintiff alleges Excalibur failed to pay the billings promptly as mandated by the Zurn facultative certificates and failed to pay the billings as of the date of this complaint.

From Legal Newsline: Reach Heather Isringhausen Gvillo at asbestos@legalnewsline.com

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