The Supreme Court’s decision in the Employers’ Liability (EL) Insurance “Trigger” Litigation is expected imminently. It is not just insurers who eagerly await that decision. Reinsurers too will be keen to analyse the consequences.
Doubtless they will have already spent time in considering their reinsurance wordings, not least to look at the basis of their coverage, ie the trigger for liability under those wordings. Reinsurance contracts are triggered on a variety of bases, all different from EL insurance.
Reinsurers will also be mindful of the effect of typical reinsurance coverage and quantum issues such as aggregation, calculation of UNL (taking account of contribution/subrogation) and indexation as well as issues specific to EL cover such as ACOD clauses.
Finally, reinsurers will be ready to scrutinise the basis and logic of the variety of ways in which EL insurers seek to allocate claims to the reinsurance policies.
The Judgment of the Supreme Court may bring a level of certainty in respect of the EL trigger issue. However, that is only one among the many issues which reinsurers must consider when UK asbestos losses are presented to reinsurance programmes. The EL trigger issue may be coming to a conclusion, but the reinsurance issues are likely to be a source of further contention.
