October 2023 • Volume 16, No. 4

Journal of Insurance & Indemnity Law header

FEATURE ARTICLES

Residency v. Domicile: Why It Matters in a Non No-Fault World

Darren LegatoBy Darren K. Legato, Serafini, Michalowski, Derkacz & Associates, PC

Michigan Courts have spent an exorbitant amount of time discussing the issue of “Domicile” versus “Residency,” though it seems almost all of it recently has centered around claims for Personal Protection Insurance (“PIP”) benefits and the order of priority for payment of those benefits under the Michigan No-Fault Act, specifically MCL 500.3114. In fact, it was re-visited earlier this year in relation to PIP benefits when the Court of Appeals issued its published decision in Mapp v Progressive Ins Co.

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Reinsurance – Follow the Settlements – What Practitioners Need to Know About Reinsurance

By James A. Johnson

Reinsurance is a contract of indemnity between insurance companies defined by a historical relationship. One company, the reinsurer agrees with another, the cedent, to indemnify it against a loss, which the cedent has assumed under a separate and distinct contract of insurance. There are two basic types of reinsurance, facultative and treaty. Facultative involves ceding part or all of an individual policy to a reinsurer as distinguished from treaty, which covers all, or specified classes of a reinsured’s policies, at a specified percentage. A facultative reinsurance policy offers individual risks to the reinsurer, who has the right (faculty) to accept or reject it. A treaty reinsurance policy is automatic and binds the reinsurer to accept all risks ceded to it of a certain type or category.

The purpose of this article is to provide guidance to general practitioners, corporate counsel, risk managers, and insurance professionals on reinsurance. A fundamental purpose of reinsurance is to permit an insurer to reduce its reserve requirement. By utilizing reinsurance, an insurer can spread the risk it undertakes over a larger number of policies, reducing the amount of reserves required to maintain its business and increase its profitability. The reinsurance relationship is characterized by the mutual duty of “utmost good faith” and “follow the fortunes” which obligate the reinsurer to indemnify the ceding insurer for all losses paid by the ceding insurer on the reinsured policy. Utmost good faith is the guiding principal of reinsurance. In short, it is a commercial transaction between sophisticated companies governed by equity and utmost good faith.

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COLUMNS

From the Chair

Rabih HamawiBy Rabih Hamawi, Law Office of Rabih Hamawi

I can’t believe it has been almost a year since becoming the chair. Time flew by, which may be a sign that I had some fun while serving my fellow Section members. I am glad to report that the Section has accomplished everything that I promised when I took the reins of leadership. Of course, I am grateful to have a wonderful team that has helped me along the way, especially the Section’s administrative assistant, Joan Sullivan; the incoming Chair, Pat Crandall; and all Council members.

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Legislative Update: Summer is winding down; full steam ahead into fall!

Katharine Buehner SmithJames J. Hunter

By James J. Hunter and Katharine Buehner Smith, Collins Einhorn Farrell PC

While we provide a very brief overview of the bills moving through the legislature here, the Insurance and Indemnity Law Section will provide additional insight at the “Meet the Architects” program being held in conjunction with its annual meeting on October 19, 2023.

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Unpublished Opinions

Christopher T. LangBy Christopher T. Lang, Collins Einhorn Farrell PC

On August 25, 2020, Musleh purchased an automobile insurance policy from Progressive, which covered a total of six vehicles. On the application, Musleh stated that all six of the vehicles were garaged in Washington Township, Michigan. Two days later, Musleh sent a notarized letter to Progressive’s underwriter, which clarified that only three of the vehicles were actually garaged in Washington Township. In November 2020, Musleh filed a claim for theft of one of these vehicles. After an investigation, Progressive informed Musleh that it would not cover the theft claim and was canceling the policy for fraud and/or misrepresentation.

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Recent Notable No-Fault Opinions

Samantha McLeodEric Conn

By Eric Conn and Samantha McLeod, Jacobs and Diemer, PC

Two plaintiffs who were injured prior to the recent amendments to the No-Fault Act and a nursing facility that treats such patients filed suit before its implementation arguing that the amendments were unconstitutional because they violated their rights under the Contracts Clause, as well as their fundamental rights to due process and equal protection.

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Scenes from the Summer Council Meeting and Mixer

The Insurance and Indemnity Law Section held its council meeting and summer mixer at the Roostertail in Detroit! We enjoyed a beautiful water-front venue, cool drinks and tasty small plates. Chair Rabih Hamawi presented scholarship awards to our law student essay winners.

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JOURNAL DETAILS

This journal is published by the Insurance and Indemnity Law Section, State Bar of Michigan Christine Caswell, Journal Editor.

Opinions expressed herein are those of the authors or the editor and do not necessarily reflect the opinions of the section council or the membership.

If you have an article idea for the Journal, please contact the editor, Christine Caswell.

SECTION INFORMATION

Officers & Council Information

2023-2024 Council Pictorial

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