Reinsurance

Insurable interest

(Feasey (representing Syndicate 957 at Lloyd’s v Sun Life Assurance Co of Canada and Phoenix Home Life Mutual Insurance Co [2002] EWHC 868 (Comm))

Insurable interest is rarely an issue in relation to reinsurance. Where a reinsured takes out reinsurance, there is plainly an insurable interest in the reinsured’s liability to the direct assured. There is some judicial disagreement as to whether a reinsurance agreement is to be classified as a pure liability policy, or whether it is some form of fresh cover on the original subject matter, but this is rarely likely to be material other than for the purpose of classifying reinsurance for regulatory purposes as cover of the class of policy reinsured. The highly unusual case of Feasey v Sun Life Assurance Co of Canada , decided by Langley J and to be reported in [2002] Lloyd’s Rep IR, arose from an attempt by a reinsurer to redefine the nature of its policies in order to meet certain Lloyd’s requirements, thereby giving rise to hugely complex issues of insurable interest and the operation of the archaic Life Assurance Act 1774 at the retrocession level.