Jurisdiction(s):
United Kingdom

Key definition

Reinsurance definition

What does Reinsurance mean? Reinsurance is the transfer by an insurer (the cedant) of part of its insurance risk to another insurer (the reinsurer) under a separate contract, to manage exposure, protect capital and satisfy prudential requirements. While regulatory definitions exist (for example under Solvency II and UK financial services legislation), the term is chiefly a contractual and market expression developed through practice and case law. Key structures include: - Proportional reinsurance (such as quota share or surplus), where premiums, losses and expenses are shared at an agreed percentage. - Non‑proportional reinsurance (such as excess of loss or stop loss), which responds once the cedant’s retention/attachment point...

Construction and Application of Aggregation Clauses in Insurance and Reinsurance under English Law: Unifying Factors, Causation and COVID-19 Business Interruption Jurisprudence

Published by a LexisNexis Insurance & Reinsurance expert

Practice notes

aggregation—background

Aggregation continues to pose a significant challenge when settling insurance and reinsurance claims, spawning numerous market disputes. Claims managers, arbitrators and even appellate courts often adopt differing interpretations of what particular policy wordings seek to achieve within an aggregation clause. After a run of rulings on familiar aggregation wording in the late 1990s and early 2000s, matters grew quieter. The final waves of litigation arising from the 9/11 tragedy, alongside clusters of solicitors’ and medical negligence claims, illuminated the modern approach to aggregation. More recently, the wealth of insurance disputes sparked by the coronavirus (COVID-19) pandemic—predominantly concerning business interruption losses—has given the courts a platform to revisit the relevant principles.

What are aggregation clauses?

An aggregation clause is a familiar feature of insurance and reinsurance contracts, allowing two or more separate losses covered by the policy to be treated as a single loss for the purposes of the excess or deductible, or for applying the limit of liability...

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Philip Aspin

7KBW

Philip Aspin is a commercial barrister at 7 King’s Bench Walk with a broad practice encompassing shipping, insurance and reinsurance, civil fraud, and general commercial litigation. Current or recent instructions include: acting for the Government of Sri Lanka in ongoing Admiralty Court limitation proceedings arising out of one of the most notorious marine casualties of recent years, the loss of the container ship “X-Press Pearl” off the port of Colombo in May 2021; acting for the claimant in a very high value Commercial Court event cancellation reinsurance claim arising out of the Covid-19 pandemic, which is scheduled for trial in early 2026; acting for the successful claimants in an LMAA arbitration arising out of shipbuilding contracts for two LNG carriers, resulting in a damages award of almost US$300m; and acting for the claimant in a Commercial Court civil fraud dispute arising out of a...

Web page updated on 21/05/2026

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