Presenters: Robert Whitney, McAngus Goudelock & Courie LLC, and Kevin Grant, SVP - Claims, Catalina Re

This webinar concerns the situation where reinsurance agreements contain “right to associate” or “right to control” clauses, which can significantly impact settlement strategies and insurance coverage decisions by insurance carriers and their coverage counsel, and can also affect how arbitrators would review settlements by a cedent in an underlying action where a reinsurer has failed to cover the settlement under a reinsurance contract because they claim that the cedent breached the “right to associate” or “right to control” clauses.

As you know, “claim control,” "claims cooperation," "consent to settle" and “right to associate” provisions within some reinsurance agreements give the reinsurer the right to influence or even control how the ceding insurer handles claims, including settlement decisions. This can give the reinsurer potentially more input into the settlement process by the cedent insurer. Of course, the more control over an underlying claim that the reinsurance agreement grants to the reinsurer, the more likely it is that an arbitration panel might find that any efforts made by the ceding carrier to interfere with the reinsurer’s contractual rights might result in the loss of the reinsurance coverage. An additional potentially complicating factor in an arbitration is reconciling a "claims cooperation" clause or similar provision with a "follow the settlement" clause and determining whether one provision would take precedence over the other in a reinsurance contract.