Guarding Privileged Documents Pose Challenge To Utmost Good Faith Doctrine In recent years, the size of bad faith judgments against insurance companies has increased astronomically in many jurisdictions. These bad faith judgments have created an interesting dilemma for insurers and their reinsurers in the process of reinsurance claims payments.
A reinsurer often, and quite reasonably, will demand that the insurer give it access to all records relating to ceded claims, including privileged documents generated by the cedents lawyers in bad faith disputes with policyholders.
While a reinsurer typically has a contractual right to review the cedents records, the reinsurers access to privileged documents may break the attorney-client or other privileges between the insurer and its counsel defending against bad faith claims.
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