Merkin, Rob; Mendelowitz, Michael --- "Reinsurance: Finding the Balance between Reinsurers’ and Reinsureds’ interests" [2012] ELECD 161; in Burling, Julian; Lazarus, Kevin (eds), "Research Handbook on International Insurance Law and Regulation" (Edward Elgar Publishing, 2012)

Book Title: Research Handbook on International Insurance Law and Regulation

Editor(s): Burling, Julian; Lazarus, Kevin

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849807883

Section: Chapter 7

Section Title: Reinsurance: Finding the Balance between Reinsurers’ and Reinsureds’ interests

Author(s): Merkin, Rob; Mendelowitz, Michael

Number of pages: 21

Extract:

7 Reinsurance: finding the balance between
reinsurers' and reinsureds' interests
Rob Merkin and Michael Mendelowitz



1. INTRODUCTION
Reinsurance may be defined as insurance of an insurer.1 It is thus a species of insurance,2
but in most jurisdictions it is treated separately from insurance in significant respects
because the parties to a reinsurance contract can be regarded as more or less of equal
bargaining power.3 For example, in those countries where there are legislative controls on
the content of an insurance policy or on the rights of the insurers to take defences,
reinsurance is excluded from their ambit.4 This may also be seen at the level of the
European Union. As far as jurisdiction is concerned, the `Brussels Regulation' (Council
Regulation 44/2001) disapplies the ordinary rules in the case of insurance, on the basis of
the need to protect the weaker party,5 but the exception is removed for reinsurance.6
Similarly, in the context of applicable law, the Rome I Regulation restricts the ability of
the parties to an insurance contract whose risk is situated in the EU to choose the
applicable law,7 but reinsurance is expressly excluded from those restrictions.
The position is similar in the context of the regulation of insurance business. There are
often separate national regimes for the regulation of insurance and reinsurance, with a
lighter touch (or indeed no touch at all) being reserved for the latter. In the European
Union the harmonised regulatory system for insurance, which had ...