Bad Faith Claims Against Munich Re Dismissed in $1.9M Reinsurance Case

MONTGOMERY, Ala. — An Alabama federal judge has dismissed a municipal insurer’s bad faith claims against Munich Reinsurance America Inc. in a $1.9 million reinsurance dispute, predicting that the state supreme court would not extend the tort of bad faith to the reinsurance context.

In a July 22 order, Judge Myron H. Thompson of the U.S. District Court for the Middle District of Alabama explained that the tort of bad faith has generally been limited to the insurance context to protect policyholders, rather than sophisticated entities.

AMIC and Munich had entered into a series of reinsurance contracts that covered AMIC’s …