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Allianz, Insurer Settle Coverage Dispute Over Kickback Claims

A pair of Allianz affiliates and their insurer have settled a dispute over coverage for underlying class actions alleging that Allianz partnered with several major airlines and Amtrak on a kickback scheme over trip insurance.

To Virginia federal court on Monday granted Continental Casualty Co.’s joint stipulation of dismissal with Allianz Global Assistance and Allianz-affiliated Jefferson Insurance Co. The parties told the court March 9 that they had reached a settlement to drop Continental’s suit seeking to limit its coverage under errors and omissions and other policies that were effective between 2016 and 2020.

Continental sought a declaration that it owed Allianz no more than $10 million in coverage for several class actions alleging that a handful of airline companies and Amtrak induced their customers to purchase trip insurance from Allianz in return for receiving kickbacks from the travel insurance provider.

Customers of American Airlines, Delta, JetBlue, United and Alaska Airlines alleged that those companies made it seem like they had no financial stake in optional flight insurance offered by Allianz through the airlines’ websites, when in reality the companies received an unsolicited fee from the travel insurance provider for each sale, according to Continental’s complaint. The same scheme took place with Amtrak as well as with Ticketmaster for event insurance, Continental said in its suit.

The various airlines, Amtrak and Ticketmaster sought indemnification from Allianz, and the travel insurance provider in turn requested coverage from Continental, according to court documents. The customer class actions were consolidated into one suit with allegations of unjust enrichment, breach of contract and violations of states’ unfair trade practices acts, per court records. The consolidated suit also alleged that the airlines and Amtrak sold customers’ personal information to Allianz in exchange for a fee, Continental said.

In its suit filed in September 2019 and amended in April 2021, Continental said it only owed Allianz coverage, if any, under a pair of policies from 2016-17. That’s because the airlines’ various requests for indemnification from Allianz stemming from the alleged kickback schemes all involved related wrongful acts that were deemed first made during the 2016-17 policy period, Continental argued. The insurer also pointed to exclusions in the Allianz policies for contractual liability and unfair competition.

Allianz had two policies with Continental for the 2016-17 period, each with a limit of $10 million subject to retentions, according to court documents. However, the insurer told the court it should only owe $10 million in total, citing a tie-in-limit endorsement in both policies that limits coverage for a “common claim.”

Allianz countersued Continental for breach of contract and a declaration that it had coverage under its other policies that ran from 2017-18 to 2019-20. The travel insurance provider argued that the different airlines’ requests for indemnification, which were originally tied to separate class actions, weren’t related claims.

The sides were embroiled in discovery disputes for much of the litigation, with US District Judge M. Hannah Lauck in March ordering Allianz to produce unredacted pleadings and briefings from the underlying class actions, as well as other documents from those cases.

Later in March, Judge Lauck said the parties notified the court that they had agreed to a settlement and that they were “working diligently” to finalize an agreement. The parties filed a joint stipulation for dismissal with prejudice Friday. Judge Lauck signed that stipulation and formally dismissed the case Monday.

Terms of the settlement weren’t immediately available Tuesday. Counsel for and representatives of the parties didn’t immediately respond to requests for comment Tuesday.

Continental is represented by Margaret T. Karchmer, Richard A. Simpson and Mary E. Borja of Wiley Rein LLP.

The Allianz affiliates are represented by Cary David Steklof and Michael Scott Levine of Hunton Andrews Kurth LLP.

The case is Continental Casualty Co. v. AWP USA Inc., case number 3:19-cv-00661, in the US District Court for the Eastern District of Virginia.

–Editing by Emma Brauer.

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