A Bermuda insurer is facing a US lawsuit after failing to pay a $1.7-million claim for hurricane damage. And the local company has filed a separate action here in the Supreme Court of Bermuda to see if the policy is valid.

Miami financier, Victor Posner, has claimed for damage to four of his residential properties in Miami Beach and Golden Beach which he said is as a result of Hurricane Andrew in 1992.

But the Bermuda-registered insurer, in which Mr. Posner has a financial stake, has refused to pay. The 77-year old has subsequently filed a federal suit in the US.

Alleging breach of contract, bad faith refusal to pay and civil conspiracy, the suit seeks the payment of $1.7 million and more in punitive damages.

Posner at one time owned 49 percent of Salem Corp. of Pittsburgh, which owned 65 percent of Essex. He is also the majority owner of Security Management Corp., which retains a 35 percent interest in Essex.

But at issue is whether or not Posner is covered and whether the policies were properly issued. These are issues that are believed to be raised in another lawsuit brought by Essex in Bermuda.

And Salem Corp. attorney, Paul Titus, believes another issue will be over whether Mr. Posner can have his premium payment back.

Essex Insurance is a Bermuda captive insurer, reinsuring workers compensation.

But Posner claims he paid insurance premiums of $56,360 for 1992-93 for property cover.

The complaint states that Posner filed an initial claim for $29,556, for damage to a Golden Beach home, which was promptly paid. Then an independent adjuster assessed the claim and put the figure at $838,565 after subtraction of deductibles.

Posner said he agreed to accept that amount because the insurer said that it would need some time before paying the $1.7 million.

But, he said, Essex then hired law firm Shutts & Bowen to scrutinise Posner's claims. After the firm's report in 1995 and in keeping with advice given by Salem's board, Essex decided to deny the claim.

A spokesman for Essex declined to comment on the matter, saying that proceedings are continuing both here and in the US.

COURTS CTS