Massachusetts residents understand the need to have insurance contracts that provide adequate coverage for disasters and the importance of having the terms of the contracts carried out. United States-based insurer, HCI, has won a breach of contract dispute that it filed against Aon Benfield (AON). According to HCI, in 2009, it signed a revenue sharing agreement (RSA) with AON. AON helped HCI secure reinsurance coverage for catastrophes like hurricanes and, in turn, received fees from the reinsurers. When HCI signed with another intermediary the following year, AON refused to pay HCI the amounts it owed under the 2009 RSA.
AON’s position was that the RSA included a clause that stated no shared revenue would be due if HCI decided to replace or terminate AON’s intermediary role. HCI stated in their position that the agreement was never intended to last more than a year, and the clause in question was ambiguous and not enforceable. About the decision, the HCI Group CEO said the company was pleased with the decision but disappointed that the simple deal had deteriorated into an argument over legal technicalities.
Contracts are written between businesses to avoid misunderstandings and to assure that the requirements of both parties are completed according to the terms of the agreement. Even when there is a written contract that has been reviewed and signed by both parties, misunderstandings and different interpretations can develop.
Sometimes the assistance of a business and commercial attorney is needed to resolve the issue between the two contract parties. Business attorneys understand the complexities of today’s commercial transactions and may be able to assist with drafting clear contracts and resolving issues if they arise.
Source: IBR Reinsurance, “HCI group wins breach of contract dispute with Aon Beinfield”, June 14, 2013