FIRST QUARTER 2005 VOLUME 12 NUMBER 1 - arias·us

3 9 P A G E
Reinsurers . . . will have the right to inspect
. . . all records of the Company that pertain
in any way to this Agreement” - typical
access to records clause wording. The
reinsurers invoked this clause and
demanded to inspect the insurer’s claim
files, including those of its in-house and
outside claims counsel.
Although the insurer produced 22 bankers
boxes of documents, it refused to turn over
any attorney files asserting attorney-client
privilege and claiming that they were not
subject to the access to records clause.
The reinsurers subsequently refused to pay
their share of the loss. The insurer then
sued for payment, and the reinsurers
counter-sued for rescission and also
claimed that the settlement was
unreasonable, in bad faith, and ex gratia.
In the context of this litigation, the
reinsurers again sought the withheld
attorney files, and the trial court granted
their motion to compel discovery of these
documents holding that the access to
records clause was “extremely expansive . .
. without any limitation.”
Citing North River Insurance Co. v.
Philadelphia Reinsurance Corp., 797 F. Supp.
363 (D.N.J. 1992) as precedent, the
Appellate Division on appeal unanimously
reversed and ruled that the “[a]ccess to
records provisions in standard reinsurance
agreements, no matter how broadly
phrased, are not intended to act as a per se
waiver of the attorney-client or attorney
work product privileges.” Otherwise,
according to the court, these privileges
would be rendered “meaningless.”
The Appellate Division hastened to add,
however, that its ruling did not preclude
the usual challenges to privilege claims or
that the court would be bound by
counsel’s characterization of a document
as privileged, i.e., these documents would
still have to satisfy each element of the
attorney-client privilege or work product
doctrine and the burden of proving those
elements rests with the party asserting
the privilege. In deciding whether to
uphold the privilege for the type of
attorney-generated claims documents in
dispute in this litigation, courts have
typically focused on whether they were
created by claims counsel in the ordinary
course of the insurer’s business of
investigating and settling claims and
whether outside claims counsel were
merely acting as a claims adjuster and not
as a true legal advisor. If so, some courts
have rejected such claims of privilege.
Gulf Insurance Co. v. Transatlantic
Reinsurance Co., No. 4762, 2004 N.Y. App.
Div. LEXIS 15691 (Dec. 28, 2004).
…ruled that the
“[a]ccess to records
provisions in
standard reinsurance
agreements, no
matter how broadly
phrased, are not
intended to act as a
per se waiver of the
attorney-client or
attorney work
product privileges.
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