Employers Bound By Follow the Fortunes Language, Court Affirms

MINNEAPOLIS - The doctrine of follow the fortunes requires Employers Reinsurance Corp. to reimburse its cedent for settlements made under reinsured disability income policies, a federal appeals court has affirmed. Employers Reinsurance Corp. v. Massachusetts Mutual Life Insurance Co., No. 10-3099 (8th Cir.).

On Sept. 7, the 8th Circuit U.S. Court of Appeals found that the reinsurance contract, which covered policies assumed by Massachusetts Mutual Life Insurance Co., contained follow the fortunes language.

Employers Reinsurance Corp. issued Connecticut Mutual Life Insurance Co. an excess disability income reinsurance treaty, under which it agreed to reinsure a portion of the losses Connecticut …