Louisiana Safety Ass'n of Timbermen-Self Insurers Fund v. Louisiana Insurance Guaranty Ass'n

Summary

The Louisiana Supreme Court held that the Louisiana Safety Association of Timbermen Self-Insurers Fund was an insurer for purposes of the Louisiana Insurance Guaranty Association Law. It further held that the Fund's agreement with Reliance Indemnity Company was reinsurance rather than direct excess insurance, so the Fund's unpaid claims arising from Reliance's insolvency were not covered claims under LIGA. The court reversed the lower courts and rendered summary judgment in favor of LIGA.

Holdings

1. The Fund was an insurer for purposes of LIGA coverage. The statutory declaration that a self-insurance arrangement 'shall not be deemed to be insurance' under La.Rev.Stat. § 23:1195(A)(1) has a circumscribed meaning, only exempting the Fund from the regulatory provisions of Chapter 1 of the Insurance Code, not from the general definition of an insurer under LIGA.
2. The contractual relationship between the Fund and Reliance was a classic instance of reinsurance, not excess insurance. The Fund functioned as the reinsured (cedent) and Reliance as the reinsurer.
3. The Fund's unpaid claims arising from Reliance's insolvency are not 'covered claims' under LIGA. The claims are rooted in a policy of reinsurance, and LIGA is not liable to cover the insolvency of a reinsurer.

Questions Presented

1. Whether the unpaid claims of a workers' compensation self-insurance fund arising from the insolvency of its excess insurance carrier are 'covered claims' under the Louisiana Insurance Guaranty Association law (LIGA).
2. Whether the Fund is an 'insurer' for purposes of LIGA coverage.
3. Whether the policy between the Fund and Reliance was reinsurance or excess insurance.

Disposition

reversed_and_remanded