Reinsurance Attorneys

As defined by reinsurance attorneys, reinsurance is the contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. The reinsurance attorneys at Shook, Hardy & Bacon L.L.P. (SHB) are adept at preparing and evaluating reinsurance contracts for our corporate clients in a wide range of industries.

SHB reinsurance attorneys are necessary resources when a client has a question or issue regarding a reinsurance contract, which is basically a contract of indemnity, meaning it becomes effective only when the insurance company has made a payment to the original policyholder. Reinsurance provides a way for the insurance company to protect itself from financial disaster and ruin by passing on the risk to other companies. Reinsurance redistributes or diversifies the risk or threat associated with the business of issuing policies by allowing the reinsured to show more assets by reducing its reserve requirements.

Reinsurance attorneys saw an increase in business when the reinsurance industry became more popular during the late 1990s and early 2000s due to natural disasters and mass tort litigation that resulted in large payouts by insurance companies. Because of the large size of the payments, some insurance companies became insolvent, resulting in legal action and the need for the involvement of reinsurance attorneys.

According to reinsurance lawyers, a reinsurance policy covers the risk or liability associated with the original policy issued. The reinsurance policy must be for a specific insurable interest. The interest to be insured must exist at the time the reinsurance policy is issued; it cannot be created later. All or part of the liability of the original policy can be covered by the reinsurance, but nothing greater. The reinsurance policy cannot cover a period longer than the original policy. Generally, because the reinsurance is not a promise to pay the debt of another but to indemnify a potential liability, the Statute of Frauds does not require the agreement to be in writing. Most often in practice, however, reinsurance policies are written to avoid problems later.

The legal details of reinsurance are best addressed by reinsurance attorneys. To learn more, contact us today.