NY's Limit On Follow-The-Fortunes Rearms Reinsurers

Law360, New York (February 8, 2013, 8:38 PM EST) -- In nixing a $420 million award to The Travelers Cos. Inc. on Thursday, New York's highest court comforted reinsurers by re-establishing that there are boundaries to the follow-the-fortunes doctrine, giving them much-needed room to fight unreasonable insurer demands, experts say.

The New York high court acknowledged that reinsurers should generally follow the insurer's financial obligations, or fortunes, wherever they lead either company. But the court stressed that reinsurers only have to accept the way an insurer allocates its losses across various policies or claims — which...
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