Captive Insurer Disputes Reinsurance Obligations Following Acquisition

McLaren Insurance Company, Ltd. (MICoL), the captive insurer for Michigan-based McLaren Health Care Corporation, has filed a lawsuit against Hiscox Agency Limited (Hiscox) and MedPro Group Inc. (MedPro), alleging a breach of a reinsurance agreement. The complaint, filed in the US District Court for the Eastern District of Michigan, concerns the assignment of Hiscox's duties and obligations under the reinsurance agreement, which relates to a Legionella batch claim.

MICoL asserts that this claim is covered under the terms of its captive insurance policies and, consequently, under the reinsurance agreement with Hiscox, which follows form to the reinsured excess claims-made hospital liability insurance policy issued by the captive. The complaint states that the reinsurance agreement obligates Hiscox to indemnify MICoL for any losses that fall within the terms and conditions of the reinsured policy and the agreement.

The complaint further states that the reinsurance agreement stipulates that no third party, including claimants or other insureds, shall have rights under the agreement and that the agreement cannot be assigned without prior written consent. MICoL alleges that Hiscox attempted to transfer, assign, or otherwise relinquish its duties and obligations under the reinsurance agreement to MedPro, following MedPro's acquisition of Hiscox, without obtaining MICoL's agreement or consent, specifically with respect to the Legionella batch claim and other claims.

MICoL seeks a declaratory judgment affirming that Hiscox cannot transfer, assign, or otherwise relinquish its duties and obligations to MedPro without MICoL's agreement. Additionally, MICoL seeks a declaration that MedPro has no authority to act on behalf of Hiscox regarding claims under the reinsurance agreement, including the Legionnaires' batch claim.