Wasa V. Lexington: The Imaginary Reinsurance Cover

Law360, New York (September 25, 2009, 3:59 PM EDT) -- Reinsurance transactions carry inherent risks for both parties. One risk is the substantial increase in liability that can result from an unexpected or unfair court decision.

In such situations, the facultative cedant must have comfort that its reinsurer will cover its share of the loss, at least when the reinsurance cover is worded similarly to the underlying insurance and a court has adjudicated important issues relating to the cedant’s liability.

While the insurance and reinsurance industry has some expectation of U.S. courts protecting insureds and claimants...
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