Reinsurance brokers—placing back-to-back reinsurance
Reinsurance brokers—placing back-to-back reinsurance

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

  • Reinsurance brokers—placing back-to-back reinsurance
  • Placing reinsurance compared with placing direct insurance
  • Conflicts of interest
  • Fair presentation
  • Duties of a reinsurance broker
  • Structuring a reinsurance programme
  • Placing back-to-back facultative reinsurance
  • Practical guidance
  • How to effect back-to-back cover
  • The back-to-back presumption in Wasa v Lexington and Vesta v Butcher

Reinsurance brokers—placing back-to-back reinsurance

This Practice Note provides a high level introduction to the role of reinsurance brokers when placing reinsurance that is intended to be ‘back-to-back’ with the underlying policy. It provides guidance as to how the duties owed by reinsurance brokers differ from brokers only placing direct insurance. It provides information and guidance on the potential conflicts of interest involved in placing back-to-back reinsurance and on risks and common mistakes that may result in claims against brokers acting in a dual capacity. This Practice Note also provides practical guidance as to how brokers may prevent or mitigate negligence claims against them and provides links to related content.

The term ‘direct’ is used in the context of insurance and reinsurance placements to refer to the insurance of the original policyholder as opposed to reinsurances of the risk. The term ‘direct’ should not be confused with ‘primary’, which refers to the first layer of a non-proportional insurance or reinsurance programme. For more information on the different forms of reinsurance and on reinsurance terminology, see Practice Note: Reinsurance—essentials—Facultative reinsurance and treaty reinsurance.

For information regarding the role and duties of direct insurance brokers, see Practice Note: The functions and duties of insurance brokers—policy placement.

For information and guidance on the regulation of insurance and reinsurance distribution, see Practice Notes:

  1. FCA Handbook—introduction for the insurance and reinsurance sector

  2. PRA Rulebook—introduction

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