Court Rejects Privilege for “Reserve Amount” Set by In-House Claims Counsel

If an insurance company may have to pay a claim, it typically sets aside a sum of money—the reserve—to fund that claim if and when payment becomes necessary. And if the company’s in-house claims counsel decides the reserve amount, the question arises whether the attorney–client privilege or work-product doctrine protects that decision from discovery.

The Arizona federal court, applying federal law, rejected a surety company’s privilege and work-product arguments, and ordered it to disclose its reserve amount to its adversary. The court made this ruling even though the company’s Senior Claims Counsel “solely” set the amount “in his capacity as legal counsel.” Western Surety Co. v. United States, 2018 WL 6788665 (D. Ariz. Dec. 26, 2018). You may read the decision here. More…