Administrator May Not Withhold Premiums from Reinsurer, Judge Rules

TRENTON, N.J. — A program administrator may not withhold a portion of premiums due Everest Reinsurance Co. as profit sharing commission, a New Jersey federal judge has ruled, explaining that the terms of the parties’ program administrative agreement does not allow withholding of this type of commission.

On Aug. 22, Judge Freda L. Wolfson of the U.S. District Court for the District of New Jersey held that by withholding the commission, the program administrator committed conversion and breached its fiduciary duty to Everest.

In October 2009, International Aerospace Insurance Services Inc. began to underwrite space risks on Everest Reinsurance Co.'s …