Reinsurance Focus

As reported in our March 27, 2008 and April 6, 2009 posts, The National Council on Compensation Insurance (“NCCI”), as attorney-in-fact for participating companies of the National Workers Compensation Reinsurance Pool (“the Pool”), brought claims against AIG and several of its subsidiaries (“AIG”). The suit generally alleged that payments made by AIG in resolution of charges against it by the New York Attorney General’s office arising from an allegedly fraudulent workers compensation premium accounting scheme, were insufficient to compensate Pool members for their losses.

AIG moved to dismiss the claims brought by NCCI, asserting (1) NCCI lacked standing to bring claims in its capacity as “attorney-in-fact;” (2) NCCI suffered no direct injury; and (3) NCCI did not have associational standing to bring the claims on behalf of individual companies. The Court agreed with AIG, finding that there was no transfer of title or assignment of interest of any affected rights in the agreement Pool members made with NCCI to act as “attorney-in-fact.” The Court also agreed that NCCI suffered no direct injury of its own, and that NCCI could not demonstrate associational standing because of the underlying conflicts between member companies. However, while the Court dismissed the claims, it noted that the litigation continues because individual pool members’ claims were “reassigned for relatedness” to the Court, and those Pool members now seek to bring those claims as a class action. National Council on Compensation Ins., Inc. v. American Int’l Group, Inc., No. 07-C-2898 (USDC N.D. Ill. August 20, 2009).

This post written by John Pitblado.