Coronavirus (COVID-19)—reinsurance implications

The following Insurance & Reinsurance practice note provides comprehensive and up to date legal information covering:

  • Coronavirus (COVID-19)—reinsurance implications
  • Impacted classes of insurance
  • Types of reinsurance impacted by coronavirus losses
  • Interaction between reinsurance policies
  • Proving liability
  • Quota share treaties and facultative proportional reinsurance
  • Excess of loss treaties
  • Challenging a cedant’s loss settlement
  • Reinsurance losses from foreign jurisdictions
  • Broad interpretations of ‘physical damage’
  • More...

Coronavirus (COVID-19)—reinsurance implications

The coronavirus (COVID-19) pandemic has had a major impact on the insurance market and on policyholders. The Financial Conduct Authority’s (FCA) high profile test case (The Financial Conduct Authority v Arch Insurance) in relation to coronavirus business interruption insurance coverage has addressed some of the issues impeding settlement of direct business interruption claims, but significant issues in relation to business interruption losses remain unresolved. Numerous other classes of insurance impacted by coronavirus are also producing substantial losses for insurers.

Many of these losses have been reinsured, as have losses emanating from foreign jurisdictions. Complex questions arise in relation to the reinsurance of these losses that remain to be resolved at the reinsurance level. The answers to these questions will determine which reinsurers will bear the ultimate cost of paying coronavirus reinsurance claims and the extent to which coronavirus insurance losses will remain with direct insurers.

This Practice Note considers some of the issues facing cedants (the reinsured) and reinsurers as a result of the coronavirus pandemic.

For guidance in relation to the implications of the FCA test case for business interruption policies with non-damage extensions, see Practice Note: Coronavirus (COVID-19)—FCA non-damage business interruption insurance test case. This includes the decisions of the Supreme Court, and of the High Court, insofar as not overturned on appeal. For a brief summary of the key implications of the

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