Reinsurance Treaty’s Broad Access to Records Provision Does Not Trump Cedent’s AttorneyClient Privilege and Attorney Work Product Protections

Liberty Mutual Ins. Co. v. Nationwide Mutual Ins. Co. (No. 14-P-1129, June 5, 2015)

The defendant-reinsurers (collectively, Nationwide) provided reinsurance to the plaintiff-cedents (collectively, Liberty Mutual). A provision of the reinsurance treaty gave Nationwide a right of access to Liberty Mutual’s documents regarding the policies covered by the treaty. The provision stated, in relevant part, that Nationwide would have “free access to all books and records of [Liberty Mutual] and of its agents or attorneys for the purpose of obtaining any information concerning this reinsurance or the subject matter thereof.”

A dispute arose when Liberty Mutual refused to produce certain documents it claimed were protected by the attorneyclient privilege or work product doctrine, and which Nationwide argued should be produced pursuant to the access to records provision of the reinsurance treaty. The parties submitted the dispute to arbitration. The panel found that the access to records provision did not provide the reinsurer with access to the cedent’s privileged documents.

Thereafter, Nationwide submitted an application to Massachusetts court to vacate the award. Instead, the Massachusetts appellate court affirmed the arbitration panel’s finding, and alluded to other “judicial decisions construing apparently comprehensive access to records provisions to exclude privileged material.”

IMPACT: Not even a broad or seemingly comprehensive treaty provision granting a reinsurer access to the insurer’s relevant records will allow the reinsurer to review privileged documents.