Insurance Post

Legal - Classic Fac Traps (and how to get out of them, Part 2)

A common problem in facultative reinsurance is that there is an unavoidable tension between a reinsured's wish to recover under its reinsurance with a minimum of fuss and the reinsurers' desire to retain some control over settlements.Historically, the courts have had difficulties in reconciling 'follow-the-settlements' clauses and claims co-operation/claims-control clauses, which, on the face of it, often seem flatly to contradict each other. The relationship between the two types of clause