Reinsurance Focus

As reported in our post on March 27, 2008, The National Council on Compensation Insurance, Inc. (“NCCI”), as attorney-in-fact for participating companies of the National Workers Compensation Reinsurance Pool (collectively “The Pool”) sued AIG and certain of its subsidiaries for allegedly engaging in a fraudulent scheme to avoid paying their proportionate share of the insurance costs in the residual market for workers compensation insurance.

AIG asserted a number of special defenses and counterclaims to NCCI’s complaint, and asserted third-party claims against certain members of the Pool. The defenses and claims were all generally based on the theory that various Pool members engaged in a premium accounting methodology similar to that utilized by AIG and found by the New York Attorney General to have been unlawful in various respects in its investigation of AIG. NCCI moved to strike the special defenses, and moved to dismiss the counterclaims. Affected members of the Pool moved to dismiss the third-party claims. The Court granted NCCI’s motion to strike each of the special defenses, but denied its motion to dismiss the counterclaims, finding that NCCI is itself a party, and not merely a representative of Pool members. The Court granted in part and denied in part the Pool members’ motion to dismiss, allowing AIG to maintain claims for breach of fiduciary duty, fraud, and unjust enrichment against specified Pool members. The Court held that New York law applies to these common law claims. National Council on Compensation Ins., Inc. v. American International Group, Inc., Case No. 07-2898 (USDC N.D.Ill. Feb. 23, 2009).

This post written by John Pitblado.