In two prior posts, this blog reported on a breach of fiduciary duty case filed against Directors of the Mississippi Windstorm Underwriters Association (MWUA) for failing to secure adequate reinsurance to cover the 2004-2005 hurricane seasons. (MWUA is composed of all insurers who write property insurance on a direct basis anywhere in Mississippi). The defendants filed a motion for summary judgment arguing that they did not owe any fiduciary duty to the plaintiffs and asserted that, regardless, the decisions made by the alleged Board members relating to the 2004-2005 reinsurance purchase met the applicable standard of care and are protected from liability by the business judgment rule.
The district court agreed that the business judgment rule applied, but denied summary judgment concluding that there were “myriad factual disputes regarding whether the decisions regarding reinsurance were indeed an exercise of good business judgment.” Association Casualty Ins. Co., et. al. v. Allstate Ins. Co., et. al, Case No. 07-525 (USDC S.D. Miss. July 29, 2008).