Top Court Decision Favors Aggrieved Policyholders Under the Insurance Law of the State of New York

STOCKBROKER LAW - Posted on August 1, 2011

On Tuesday, June 28, 2011, the New York State Court of
Appeals handed down its decision in ABN AMRO Bank N.V. v. MBIA, Inc., affording victimized insurance
policyholders and customers access to the courts for their losses. Notably, the lower court had held
that certain preemption provisions under New York State law prevented victimized policyholders from
pursuing claims against insurance companies.

Citing New York’s long-established case law permitting victimized insurance company policyholders to
pursue claims for breach of contract, including New York’s contractual claim for breach of covenant of
good faith and fair business dealings, the Court ruled that victimized policyholders may pursue common
law causes of action incorporating, by implication, claims under the Insurance Law of the State of New
York.

Various provisions under the Insurance Law of the State
of New York, including Sections 308, 2123 and 4226 and various regulations of the New York State
Insurance Law, including Regulation 60, have been used to protect insurance company investors with
violations of these various provisions forming component parts of breach of contract claims,
notwithstanding the fact that these sections and provisions do not afford a direct, separate statutory
private right of action.