Reinsurance: back-to-back coverage

It is often said that there is a presumption that a reinsurance contract is to be construed back to back with the underlying reinsurance. The cases have demonstrated a number of important limitations on that principle: it is confined to facultative and proportional reinsurance; it cannot contradict clear wording to the contrary; and it is less likely to operate where coverage issues are at stake.

The nature of the presumption was considered by the New South Wales Court of Appeal in MetLife Insurance Ltd v RGA Reinsurance Company of Australia Ltd [2017] NSWCA 56.