New York Law Journal "Reasonableness of Insurance Allocation Decisions Following Settlement" by Thomas E.L. Dewey

April 29, 2015

A couple of lessons can be learned from this case. First, although New York courts endorse 

a robust "follow the settlements" doctrine, including as to allocation decisions, it is not clear 

that it applies in every reinsurance case, such as those lacking an express "follow the 

settlements" clause. The First Department expressly reserved this question "to be resolved 

in future proceedings."24 And second, although New York courts require deference to a 

cedent's allocation decisions where the doctrine applies, it seems that substantial litigation 

and discovery will need to take place in many, if not all cases, before a court will determine 

whether that allocation was objectively reasonable.


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