Appeals court sides with HCI Group

TAMPA — A U.S. appeals court has backed a trial-court decision in favor of Tampa-based insurer HCI Group Inc. in a revenue-sharing disagreement with Aon Benfield.

HCI hired Aon Benfield to assist it in securing reinsurance coverage for its Florida homeowners' insurance business in 2009. As part of its agreement with Aon, HCI says that Aon agreed to pay it a portion of the income it received from the reinsurer.

HCI says later Aon refused to pay that revenue after HCI choose another intermediary for the following year. Aon cited a clause that said no revenue would be paid out at any time after HCI decided to replace Aon and that HCI had forfeited its share of the revenue.

HCI sued Aon in federal court contending the revenue-sharing agreement was never intended to be more than a one-year deal and that the forfeiture provision was ambiguous and not enforceable.

After a two-day trial, the trial judge agreed with HCI and entered a judgment for HCI. Aon appealed to the U.S. Court of Appeals, Seventh Circuit, in Chicago contending the renewal provision was not ambiguous.

The court recently found the RSA language was ambiguous and unreasonable.
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“This industry survives on trust,” Paresh Patel, HCI Group's chairman and CEO, says in a press release. “We trusted Aon to pay us. And they did pay us... after a trial, an appeal, and tens of thousands of dollars in legal fees. A simple handshake deal devolved to negotiating with lawyers and parsing confusing contract language. Ultimately, we were vindicated by the facts.”