The 43 people who perished in the 2016 Chapecoense plane crash are pursuing legal action against reinsurers in US courts and expect to win, according to a legal representative for the group. However, if the US case does not end in their favor, the group will not hesitate to pursue legal action against broker Aon in English courts.
An English court judge ruled in December that the alleged reinsurers of the 2016 LaMia Flight 2933, which crashed in Colombia while carrying members of the Brazilian football team Chapecoense, journalists, crew members, club officials, and guests, cannot maintain an anti-suit injunction shielding them from an $844 million lawsuit brought by parties in the US state of Florida. The flight was carrying journalists, crew members, club officials, and guests.
“We believe we can collect 100% of our judgment against Tokio Marine and the reinsurers in the United States, and we intend to proceed not only to judgment but, if necessary, with collection efforts around the world,” Steve Marks, Podhurst Orseck attorney, told Insurance Business.
What does Aon stand to gain from the Chapecoense ruling?
The judge may have overturned the order against the reinsurers, who provided reinsurance protection for a $25 million policy issued by insurer Bisa, but the judge took a different stance toward reinsurance broker Aon, who was also mentioned as a participant.
Therefore, any legal action against the broker—who Marks claims is not the group’s “primary target”—must be brought in an English court. For this report, Aon declined to respond.
The second view, according to Marks, was that if there was no coverage, the brokers had been negligent in failing to ensure that the necessary coverage was in place. This would call for a new trial, during which we would have to establish the brokers’ carelessness.
“It was our secondary notion, and we can still pursue that, but if we were not successful against Tokio Marine, we would have to do it in the UK. But we can’t win both – we can only get our recovery once, we can’t have a double recovery.”
While reinsurers in the case are known to view this as a serious blow to the victims’ lawsuit in Florida, Marks remained positive about the Aon injunction judgment.
Who is a party to the legal dispute?
A 13-person panel of London underwriters handled the reinsurance contract in question, with Tokio Marine Kiln Syndicate 0510 identified as the primary party in court filings. According to court records, it was placed through the insurer Bisa via Aon Benfield Argentina and Aon UK. Tokio Marine Kiln declined to comment on this article.
The six only survivors of the crash, which claimed the lives of 71 passengers, are among the 43 people who participated in the event. Later investigations suggested that LaMia workers were “at fault in letting this occur and in failing to declare an emergency in time,” according to the English judgment. The aircraft was discovered to have run out of fuel.
LaMia CA, Kite Air Corporation, Mr. Albacete, the owner of Kite, and Mr. Rocha, who is alleged to have been a LaMia officer, were also parties to the defense. A defendant in the TMK Action was also Bisa.
Drew battle lines
According to Marks, the victims’ next actions will be to continue the Florida suit.
As stated in the English judgment, if an insurer fails to defend an insured in bad faith, it may be held liable under Florida law for damages exceeding the policy maximum.
Representatives for the victims have claimed that after interest is taken into account, the lawsuit might now be worth $920 million and could eventually surpass the $1 billion threshold.
The role of a $25 million “humanitarian fund” established by the reinsurers in 2017 is likely to be a point of contention. According to Marks, none of the victims in the current lawsuit have accessed this fund, but the reinsurers may argue that this does not mean that represented families have shown no interest in it.
Insurance Business is aware that there was no legal requirement for the creation of this fund, and some impacted families have benefited from it by accessing support. Families or victims could still file claims against Aon despite having access to this money.
In court documents, the victim’s counsel has argued that the fund was established so that reinsurers could “circumvent their duty” to assert claims.
The victims would cite Bolivian law, which they have said rules the policy, to argue that such a defense is “not valid,” since the reinsurers are anticipated to contend that there was no coverage because the premium was not paid, according to Marks.
The victims are anticipated to argue that despite this, they had “repeatedly” allowed cover for trips to Colombia, Marks added. Reinsurers are also anticipated to assert that Colombia was not covered by the policy.
The English judge noted in his decision that Reinsurers did make some “strong points,” including as:
- Before the Florida proceedings, Bisa had discharged all claims under the reinsurance policy.
- LaMia had consented to a decision in writing.
- Flights to Colombia were prohibited without prior approval, even though they had previously been allowed upon request.
- LaMia didn’t ask Bisa or the reinsurers to become involved to defend the case.
- The individuals who wanted to join LaMia, the reinsurers, and other defendants in settlement agreements stipulated and accepted that there was no insurance coverage for the incident.
According to the judge overseeing the English case, Mr. Simon Salzedo KC, “If it were my responsibility to trial the Individuals’ claim against the reinsurers on the papers and submissions I have heard, I would have no problem in rejecting it.” But I have to keep telling myself that’s not my job.
The Florida court will now be in charge of the situation.
