Reinsurance Focus

Liberty Travel (and affiliated travel and leisure companies) and Travel Re-Insurance filed cross-motions for summary judgment on a dispute related in part to reinsurance of travel insurance products sold by Liberty to its customers. Liberty and Travel Re’s relationship was complex, and involved both reinsurance and direct insurance. Among other things, Travel Re contracted with Liberty to be its exclusive provider of travel insurance products. Essentially, Travel Re provided reinsurance on travel products, and would also collect “Salvage” from Liberty, meaning the excess money collected when a travel supplier did not issue a cancellation penalty or issued a credit or reimbursement to Liberty following a customer’s trip cancellation. After some time, Liberty sought to end the parties’ exclusive arrangement, and Travel Re filed suit.

The United States District Court for the District of New Jersey granted in part Liberty’s motion for summary judgment. The court ruled that (a) Liberty was not liable for damages unforeseeable at the time the contract was entered; (b) the existence of a valid contract barred Travel Re’s claim for unjust enrichment; and (c) Travel Re’s breach of the implied covenant of good faith and fair dealing should be dismissed as duplicative of the breach of contract claim. The court, however, denied summary judgment as to the breach of contract and also ruled that material issues of fact remained as to whether Travel Re mitigated damages. Finally, the court denied Travel Re’s motion for summary judgment on the exclusivity provision, finding issues of fact as to who was to blame for the failure to engage in a joint determination of reasonable competitiveness under the contract. Travel Re-Insurance Partners, Ltd. v. Liberty Travel, Inc., No. 09-CV-5033 (D. N.J. May 9, 2012).

This post written by John Black.

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