Insurance broker Southwest Risk LP, based in Dallas, announced it has settled a dispute with Allied World Assurance Co.
The announcement released by Southwest Risk did not elaborate on the nature of the dispute but Allied World in July raised allegations concerning the adequacy of information about commercial properties provided to the insurer by Southwest Risk in a lawsuit against reinsurer Hannover Rueck Versicherung AG.
The general counsel for ClearView Risk Holdings LLC, Southwest Risk’s parent company, did not respond to phone and email requests from Insurance Journal for more information about the allegations and the settlement. But Southwest Risk CEO Parker Rush commented in the company’s announcement: “We are pleased to report that after a thorough review of the facts, Allied World has withdrawn all of its allegations and that this dispute is now settled.”
Southwest Risk is a specialty lines insurance broker for high hazard business exposures and targets the real estate, construction, energy and manufacturing industries.
In Allied World Assurance Company (U.S.) Inc. v. Hannover Rueck Versicherung AG_No. 12-5146 (S.D. N.Y.), filed in U.S. District Court for the Southern District of New York, Allied World seeks to recover millions in reinsurance proceeds from Hannover Re for a portfolio of commercial properties placed with Allied World by Southwest Risk and for which Allied World obtained reinsurance from Hanover Re.
In the lawsuit, Allied World asserts that Southwest Risk provided loss history information for the portfolio that was “inaccurate” or “did not contain complete loss histories or accurate loss ratios.”
The insurer maintained it relied upon representations by Southwest Risk in issuing policies for those properties and other properties that were subsequently added to the portfolio.
It was only after some of the properties suffered losses and insureds submitted claims that Allied World became aware “of the possibility that SWR had failed to include accurate loss history information in the materials submitted” to the insurer, Allied World asserts in the lawsuit.
Despite that discovery, Allied World explained that it “found no evidence that misinformation had been provided by the property owners insured” under the policy at issue. The insurer “determined that it had no basis to reject, and therefore remained obligated to pay, the property claims,” the lawsuit states.
Allied World asserts in the lawsuit, however, that Hannover Re has not paid multiple reinsurance billings submitted by Allied World for covered damages to properties contained in the SWR portfolio.
In announcing the settlement between Southwest Risk and Allied World, Parker said he is excited about the outlook for both companies, commenting, “On the heels of a successful NAPSLO conference, it is clear that we have a bright and successful future ahead of us. We look forward to growing our business and adding resources in the coming months. We also look forward to working with Allied World in the years to come.”