"The 2013 Captive Quandary and the Duty of Utmost Good Faith"

[Editor’s Note: Adam H. Fleischer and Jason P. Minkin are partners with Bates Carey Nicolaides LLP in Chicago and practice in the areas of insurance and reinsurance litigation. Copyright © 2013 by Adam H. Fleischer and Jason P. Minkin. Responses are welcome.]

I. Introduction

Today more than ever, reinsurers are reinsuring either captive insurance companies or reinsureds who retain only a very small share of the risk for themselves, while passing most of the risk to reinsurers.ⁱ When a loss occurs under such a scenario, reinsurers are often contractually relegated to sitting helplessly on the sideline and watching the claim …