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Balzano v. Bluewater, 823 P.2d 1365 (Colo. 1992). Insurance commissioners
have the general power to supervise reinsurance contracts in the public
interest, including the power to disallow reinsurance contracts containing
setoff provisions.
Connecticut Connecticut Life and Health Insurance Guaranty Association v. Jackson, 173
Conn. 352, 377 A.2d 1099 (1977). The court ruled that the guaranty association
must exhaust its administrative remedies with the insurance commissioner in a
dispute with the commissioner over the interpretation of a provision in the
guaranty fund law before it could bring an action for a declaratory judgment in
the courts.
Veteran’s Memorial Medical Center et al. v. Connecticut Insurance Guaranty
Association, 1996 Conn. Super LEXIS 2763 (Superior Court of Connecticut,
Judicial District of New Haven, at Meriden). This declaratory judgment action
addresses the issue of the statutory obligation of the Connecticut Insurance
Guaranty Association (CIGA). Ideal Mutual Insurance Company issued a
Comprehensive Hospital Liability Policy to the plaintiff Veteran’s Memorial
Medical Center (VMMC). VMMC purchased an Excess Blanket Catastrophe
Liability Policy from Pacific Employer’s Insurance Company for the same
coverage period as the Ideal Mutual policy. A medical malpractice claim was
made against VMMC. Before the claim could be resolved, Ideal Mutual
became insolvent. After a settlement of the claim was reached, Pacific
Employer’s decided that it would not make any payment until the first
$500,000 of the settlement was paid. The insolvency of Ideal Mutual,
however, made unavailable the $500,000 that Ideal Mutual would have paid
if it had not become insolvent. VMMC and Pacific Employer’s paid the
claimant a total of $350,000 to the claimant as a good faith settlement and
preserved their rights to proceed against CIGA by an action seeking a
declaration of their respective rights. CIGA argued that Pacific Employer’s
was required to “drop down” and fill the void created by the Ideal Mutual
insolvency before CIGA would be obligated to step in.
The Court first ruled that Pacific Employer’s had the right, as it did here, to
seek a declaratory judgment of its rights vis‐à‐vis CIGA, and found that a
party other than an insured is permitted to make a claim against CIGA. After
analyzing out‐of‐state decisions for guidance, the court concluded that CIGA
stands in Ideal’s shoes and the excess insurer was not required to drop down
unless the policy specifically provided for drop down coverage. The Pacific
Employer’s policy did not contain such a coverage provision. The court
noted that it has long been held that an excess insurer such as Pacific
Employer’s may make settlement and may later seek to recover up to the
limits of the primary policy. Citing cases from other jurisdictions, the court
found that an excess carrier should not be punished for participating in a
good faith settlement of a claim and should not be saddled with a loss
resulting from a primary carrier’s insolvency. The court awarded a
declaratory judgment to VMMC and to Pacific Employer’s to the effect that
CIGA was obligated to reimburse them for Ideal Mutual’s share of the
settlement paid to the claimant.
Delaware
Remco Ins. Co. v. State Ins. Dept., 519 A.2d 633 (Del. 1986). The Delaware
Insurance Code enables the Insurance Commissioner to act quickly, without
the delay and expense involved in petitioning the Court of Chancery, when the
Commissioner determines, after a hearing, that the insurer has engaged in any
act which would subject it to formal delinquency proceedings or when the