While it may sound like the title of a novel by Robert Ludlum, the Bermuda Form is in fact an excess liability insurance policy. The Bermuda Form, so called because it was introduced by two Bermuda-based companies, ACE Insurance Company, Ltd. and XL Insurance Company, Ltd., emerged in the wake of the crisis in the liability insurance market in the United States in the mid-1980s, a crisis that saw premiums rise dramatically and the withdrawal of coverage for certain types of liability. It typically provides that it is governed by a modified version of New York law and requires that disputes be resolved by arbitration in London under the English Arbitration Act. This article discusses the origins of the Bermuda Form, some of its key provisions, and some considerations that bear on the arbitration of Bermuda Form disputes.
Origins of the Bermuda Form
One reason for the crisis in excess liability insurance market in the 1980s played a role in shaping the content of the Bermuda Form—the many decisions of the U.S. courts interpreting liability policies in a manner that exposed insurers to large indemnity obligations in mass tort cases. While U.S. courts did not all take the same approach, the leading case of Keene Corp. v. Insurance Company of North America, 667 F.2d 1034 (D.C. Cir. 1981), is illustrative.
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