Reinsurance Focus

American International Group, Inc. (“AIG”) and its subsidiary, National Union Fire Insurance Company (“National Union”) moved to compel arbitration of claims brought against them by the plaintiff, Epix Holding Corporation (“Epix”) in New Jersey state court. Epix alleged that the insurers were engaged in an illegal bid-rigging scheme with the broker (the co-defendants Marsh McClennan Companies, Inc. and March USA, Inc.), and other improper tactics, for the purpose of imposing higher premiums and onerous payment conditions on insureds such as Epix. The trial court denied the motions to compel arbitration, but the New Jersey Appellate Court reversed. Epix argued that the dispute primarily pertained to certain premium calculations that were not intended to come within the scope of the parties’ arbitration agreement. It also argued that AIG is not entitled to enforce the arbitration agreement because it was not a signatory to the contract. The Appellate Court rejected Epix’s arguments, finding that, on the threshold standing issue that AIG and National Union (which was a signatory to the contract containing the arbitration clause) were substantially aligned in connection with Epix’s allegations against them, and that AIG’s status as a non-signatory was thus immaterial. It also rejected Epix’s arguments that the dispute was not within the scope of the arbitration agreement, given the wide range of allegations Epix made against the insurers. Epix Holding Corp. v. March & McClennan Companies, Inc., No. A-3059-08T3 (N.J. App. Ct. Nov. 17, 2009).

This post written by John Pitblado.