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...

COVID-19 reinsurance disputes: coverage, proof and aggregation under English law, including quota share, excess of loss and catastrophe programmes, FCA v Arch implications, foreign-law exposures and arbitration strategy

Published by a LexisNexis Insurance & Reinsurance expert

Practice notes

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Practice Note

The coronavirus (COVID-19) pandemic has significantly affected the insurance market and policyholders. The Financial Conduct Authority’s (FCA) widely publicised test case (The Financial Conduct Authority v Arch Insurance) on coronavirus business interruption cover has removed some obstacles to settling direct business interruption claims, yet important questions about interruption losses remain unanswered. A range of other insurance classes impacted by coronavirus are likewise generating substantial losses for insurers. Many such losses have been placed into Reinsurance, including exposures arising from overseas jurisdictions. Challenging issues continue to emerge around how these losses respond under reinsurance, which remain to be determined at the reinsurance layer. The resolutions will identify which reinsurers ultimately meet the cost of coronavirus reinsurance claims and how much of the coronavirus insurance burden stays with direct insurers. This Practice Note explores several issues confronting cedants (the reinsured) and reinsurers stemming from the coronavirus pandemic. For guidance on the implications of the FCA test case for business interruption policies featuring non-damage extensions, see Practice Note: Coronavirus (COVID-19)—FCA non-damage business interruption insurance test case [Archived]. This...

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Rebecca Jacobs

7 KBW

Rebecca Jacobs is a commercial barrister at 7 King’s Bench Walk, specialising in insurance and reinsurance, jurisdiction and conflicts of laws, commodities, shipping, civil fraud and general commercial disputes....

Web page updated on 21/05/2026

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