Reinsurance

The duties of the reinsured

The lengthy judgment of Morison J in Bonner v Cox Dedicated Corporate Member Ltd [2004] EWHC 2963 (Comm), [2005] Lloyd’s Rep IR (forthcoming) contains a detailed analysis of a number of matters crucial to the operation of the London reinsurance market. Three points were raised. The first was the duration of the duty of utmost good faith owed by a reinsured when the reinsurance is made in advance of the reinsurance. The second was whether a reinsured owed any form of duty of care to reinsurers in the acceptance of risks. The third was the duration of a reinsurance contract where the risks reinsured were long-term. It is likely that the second of these matters will be of the greatest interest to the market, as the court has all but rejected the notion that a reinsured under an excess of loss treaty owes any form of duty to reinsurers in respect of the acceptance of risks.