The New Hampshire Supreme Court has ruled that the contribution claims between insurers must be based on the settlement amount rather than the actual distributions made to policyholders. This decision affects Century Indemnity Company (CIC) and the Home Insurance Company (Home), both of which issued insurance policies to the same insured party. The ruling clarifies how contribution rights are determined under the state's Insurers Rehabilitation and Liquidation Act.
The court's opinion, issued on April 24, 2026, stems from a dispute over CIC's claim for contribution against Home. CIC argued that it should be able to calculate its contribution based on the shortfall between the settlement amount and what Home actually distributed to the insured. However, the court affirmed the lower court's decision that the settlement amount established Home's liability, thereby limiting CIC's contribution claim.
Background
The case involves two parties: Century Indemnity Company and the Home Insurance Company. Both companies provided insurance coverage to a common insured party, which filed claims against them after Home became insolvent in 2003. Home entered liquidation proceedings under the Insurers Rehabilitation and Liquidation Act, which governs how claims against insolvent insurers are processed.
In 2023, the New Hampshire Insurance Commissioner, acting as the Liquidator, settled Home's liability to the insured. This settlement allowed the insured to claim a certain amount from Home's estate, classified as a “Class II” claim. However, due to Home's insufficient assets, the insured would not receive the full amount of the settlement, leading CIC to assert a contribution claim for the shortfall.
After CIC's claim was disallowed by the Liquidator, the matter was referred to a referee for determination. The referee ruled that Home had satisfied its obligation to the insured through the settlement, which meant CIC could not claim further contribution for the shortfall. CIC's subsequent motion to recommit the order was denied by the trial court, prompting the appeal.
The Ruling
The New Hampshire Supreme Court ruled in favor of the Liquidator, affirming the lower court's decision. The court stated, "the full amount of The Home Insurance Company’s settlement with Home and CIC’s common insured should determine the extent of CIC’s contribution rights." This ruling means that CIC's contribution claim is limited to the settlement amount, regardless of how much Home actually distributed to the insured.
The court emphasized that the Insurers Rehabilitation and Liquidation Act provides a comprehensive framework for handling claims against liquidating insurers. The court noted that the Act is designed to protect the interests of insureds and creditors while ensuring equitable distribution of assets. The judges involved in the ruling included Justice Donovan, along with Justices Countway and Gould, who concurred with the decision.
Impact
This ruling has significant implications for how contribution claims are calculated in the context of insurance liquidations in New Hampshire. By affirming that the settlement amount is the determining factor for contribution rights, the court has clarified the legal landscape for insurers facing similar situations in the future.
The decision reinforces the priority of policyholders in the distribution of an insolvent insurer's assets and sets a precedent for how claims will be treated under the Insurers Rehabilitation and Liquidation Act. Insurers in New Hampshire must now consider this ruling when assessing their potential liabilities in similar liquidation cases.
What's Next
It is unclear if this ruling will be appealed further. The court's opinion does not mention any pending related cases, but the decision may influence future litigation involving contribution claims among insurers.