Reinsurance, Reserve Information Discoverable in Coverage Action, S.C. Federal Judge Rules

CHARLESTON, S.C. — An insurer’s communications with its reinsurers are relevant to bad faith claims asserted against the insurer in a construction defect coverage action because they could reveal why the insurer changed certain coverage positions as time passed, a South Carolina federal judge has ruled.

On March 31, Judge David C. Norton of the U.S. District Court for the District of South Carolina adopted a magistrate judge’s determination that the communications are discoverable. In addition, the judge held that information concerning the insurer’s loss reserves is relevant because it may reveal the insurer’s assessment of the validity of the …