Reinsurance

Following the reinsured’s settlements

Gavin Kealey QC, sitting as a deputy High Court judge, has, in Assicurazioni Generali SpA v CGU International Insurance plc [2003] EWHC 1073 (Comm), attempted to answer a conundrum which has been raised by earlier cases involving the construction of follow the settlements clauses – Insurance Company of Africa v Scor (UK) Reinsurance Company Ltd [1985] 1 Lloyd’s Rep 312 , Hill v Mercantile and General Reinsurance Co plc [1996] 1 WLR 1239 and Hiscox v Outhwaite (No 3) [1991] 2 Lloyd’s Rep 524 – but not fully resolved by them. The issue is the operation of a follow the settlements clause where the direct policy and the reinsurance are written on a back-to-back basis.