Table of Contents

Research Handbook on International Insurance Law and Regulation

Research Handbook on International Insurance Law and Regulation

Research Handbooks in Financial Law series

Edited by Julian Burling and Kevin Lazarus

Given its economic importance, insurance is a field that has been underserved as an area of academic study. This detailed book provides much needed coverage of insurance law and regulation in its international context.

Chapter 7: Reinsurance: Finding the Balance between Reinsurers’ and Reinsureds’ interests

Rob Merkin and Michael Mendelowitz

Subjects: economics and finance, money and banking, law - academic, commercial law, finance and banking law, insurance law, law -professional, commercial law, finance and banking law

Extract

JOBNAME: Lazarus PAGE: 1 SESS: 3 OUTPUT: Wed Dec 21 15:05:32 2011 7 Reinsurance: finding the balance between reinsurers’ and reinsureds’ interests Rob Merkin and Michael Mendelowitz 1. INTRODUCTION Reinsurance may be defined as insurance of an insurer.1 It is thus a species of insurance,2 but in most jurisdictions it is treated separately from insurance in significant respects because the parties to a reinsurance contract can be regarded as more or less of equal bargaining power.3 For example, in those countries where there are legislative controls on the content of an insurance policy or on the rights of the insurers to take defences, reinsurance is excluded from their ambit.4 This may also be seen at the level of the European Union. As far as jurisdiction is concerned, the ‘Brussels Regulation’ (Council Regulation 44/2001) disapplies the ordinary rules in the case of insurance, on the basis of the need to protect the weaker party,5 but the exception is removed for reinsurance.6 Similarly, in the context of applicable law, the Rome I Regulation restricts the ability of the parties to an insurance contract whose risk is situated in the EU to choose the applicable law,7 but reinsurance is expressly excluded from those restrictions. The position is similar in the context of the regulation of insurance business. There are often separate national regimes for the regulation of insurance and reinsurance, with a lighter touch (or indeed no touch at all) being reserved for the latter. In...

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