“Follow the Fortunes” and “Follow the Settlements”

Slide 18
Wasa v. Lexington and its impact on Continental
Europe
implied terms of the reinsurance contract (under English law)
� English law does not envisage
– neither the cedent‟s right and duty to manage the business
– nor the reinsurer‟s duties to follow the reinsured in those decsions taken
in course of exercising his abovementioned duty (follow the settlements)
or to carry the burden of any obligation arising to the cedent without his
contribution in course of exercising that duty (follow the fortunes)
an implied term of a reinsurance contract
� however, the parties are entitled to incorporate such provisions into their
contract which make it subject to such terms along a very similar line as
considered customary in other major jurisdictions
� generally speaking, clear and unambiguous language of the contract is
required to prove that intention of the parties