Insurance/Reinsurance: Settlement Agreements

A recent High Court decision in the on-going case between the Korean National Insurance Corporation ("KNIC") and its reinsurers highlighted:

The need for settlements between insurers to be evidenced in writing, particularly in large and/or complex disputes.

A claimant is entitled to commence representative proceedings against a lead reinsurer as the only named defendant and, if the named defendant has the same interest as all the other parties which it represented, does not need to go to the hassle and expense of serving all named (re)insurers subscribing to the policy. Commencing proceedings against a subscription market has historically tended to give rise to procedural and practical difficulties, because of the need to identify and serve each of the syndicates and companies participating on the risk. This decision may assist in saving time and costs in commencing proceedings.

(Re)insurers should not agree to a currency conversion clause which is not linked to the open market rate and could have the effect of artificially inflating claims.

(Re)insurers...