Bad Faith Claims Trimmed from Ala. Federal Reinsurance Action

MONTGOMERY, Ala. — An Alabama federal judge has dismissed a municipal insurer’s bad faith claims against Munich Reinsurance America Inc. in a reinsurance coverage action, predicting that the Alabama Supreme Court would not extend the tort of bad faith to the reinsurance context.

On March 16, Judge Myron H. Thompson of the U.S. District Court for the Middle District of Alabama also denied Alabama Municipal Insurance Corp. (AMIC)’s motion to amend its complaint to add additional bad faith claims, noting that “application of the [bad faith] tort has been particularly limited in Alabama.”

“Indeed, the Alabama Supreme Court has been …