Claims cooperation clauses

In Markel Capital Ltd v Gothaer Allgemeine Versicherung AG [2008] EWHC 2517 (Comm) the claimant reinsurers sought summary judgment for negative relief against two reinsureds in respect of the reinsureds’ claim for indemnification for payment under directors’ and officers’ cover. Because the case was concerned with an application for summary judgment, the ultimate question was whether the reinsurers had a reasonable prospect of success in defending the claim, which Mr Justice Andrew Smith thought was the case. Accordingly, the issues raised by the case, relating to a claims cooperation clause, are not analysed in the depth that will be required should the matter come to trial.

Markel: the facts

This was an application by the claimant reinsurers for summary judgment in the form of negative declaratory relief against two German reinsureds, Gothaer and Continentale. The reinsureds belonged to a pool of German and Dutch insurance companies, managed by VOV, which wrote directors’ and officers’ liability cover. West Deutsche Landesbank Gironzentrale (WDLB) approached the pool for insurance cover, but the proposal was declined on the ground that it fell outside the pool’s business guidelines. However, both Gothaer and Continentale indicated that they would accept the risk themselves if reinsurance could be placed, and to that end VOV approached brokers Bloemers to find reinsurance. Bloemers was successful, and on 16 June 2000 the reinsurers subscribed to a slip policy (so that no further policy was to be issued) for a proportional cover with a share of DEM24m, the reinsureds’ retention being DEM1m. The slip was for 36 months from 1 January 2000 and the conditions stated ‘Claims Co-operation Clause (wording to be agreed)’. The reinsured was described as ‘Gothaer Versicherungsbank VVaG and Kontinentale Versicherungs-AG as per VOV GmbH’.