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ARTICLE · 28 JUNE 2013

A Pizza Slice That’s Hard To Swallow

Claims Control Clauses with multiple reinsurers who don’t speak with one voice can leave the reinsured little option but to put itself in breach with some reinsurers, jeopardising part of its security.

United KingdomInsurance
Nick Miles
Nick Miles

Claims Control Clauses (CCCs) with multiple reinsurers who don't speak with one voice can leave the reinsured little option but to put itself in breach with some reinsurers, jeopardising part of its security. A recent decision1 about a London market reinsurance of a Kuwaiti policy has been portrayed as allowing reinsureds in this predicament freedom to refuse control with impunity. For the following reasons, reinsurers should not allow it to influence their claims practices.

Which negotiations must a reinsurer be allowed to control?

The CCC required that each reinsurer control negotiations "in connection with . . . loss or losses . . . which may give rise to a claim" against it. All reinsurers bar one wished the reinsured to raise an exclusion-based defence to a claim for costs of repair of a storage tank. One reinsurer and the reinsured wanted the claim to be part-paid, to be funded between them according to their respective interests (the reinsured had a

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