Jurisdiction(s):
United Kingdom

Related legal acts

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...

Insurance and Reinsurance: Claims Co‑operation, Control and Non‑Admission Clauses—Conditions Precedent, Standard Wordings, Limits, KC Options, Follow‑the‑Settlements Conflicts and Section 51 Costs (England and Wales)

Published by a LexisNexis Insurance & Reinsurance expert

Practice notes

Introduction to claims co-operation and control clauses

All liability insurance is written on an indemnity footing, under which the insurer undertakes to hold the policyholder harmless for liability owed to a third party. It was once the case that the insured could recover only after making payment; however, in Post Office v Norwich Union Fire Insurance Society Ltd the court confirmed that the right to an indemnity arises once the insured’s liability is fixed by agreement or judgment. Liability wordings commonly also promise to reimburse all costs incurred in defending third party claims, sometimes subject to a consent requirement that must not be unreasonably withheld.

Where a claim sits within the policy limit—save for any excess or deductible—the insurer bears the entire financial exposure for the claim itself. Insurers may likewise be the only party with the requisite expertise and resources to handle the matter. A clause is therefore used to grant them the right, but not the obligation, to assume conduct of the defence and to control any settlement (a claims control...

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Ed Anderson

Ed is a partner at Browne Jacobson. Until 2008 he was London Head of Financial and Professional Risk and returned to the firm in 2017 having spent almost 10 years growing the legal and financial professional indemnity team at Beale and Company Solicitors. Ed has spent almost 30 years defending professionals facing large and complex negligence claims. He mainly acts on behalf of other solicitors, accountants, actuaries, insurance brokers and financial advisers. He also acts for financial institutions and advises insurers on coverage disputes across all classes of business. ...

Web page updated on 27/05/2026

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