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Reinsurance is where insurers minimise the possibility of large, unpredictable losses by placing a percentage of the risk with a different insurer. This ensures that its ‘pot’ of premiums will be sufficient to cover all likely claims.
One example of a risk that insurers underwrite is professional indemnity - insuring professionals, for example accountants or lawyers, against claims of negligence. Another example is product liability
- insuring a company against loss or damage caused by the failure of a product.
When a claim is made the first thing the insurer's solicitors will investigate is whether the claim is covered by the insurance policy. They will then take a view as to whether the insured firm is liable for the claim or whether it should be contested. Contracts between insurers and their clients (the insured) are contracts of the ‘utmost good faith’. This requires that the insured discloses all material facts before the contract is concluded, which allows the insurer to assess the precise nature of the risk. Many of the landmark cases in insurance law focus on what constitutes materiality, and the extent to which this results in inducement into a contract. Where an insurer considers that it has been induced into an insurance contract through a material non disclosure, it may try to avoid or cancel the policy.
The huge variety of claims that insurers deal with means that our work touches on many different areas of the law. This is mainly contract and tort but it can also cover consumer, public and international law.
London’s prominence in the global insurance market means that a large number of foreign risks are insured or reinsured by the London market. This means that there is often an international element to claims and we regularly find ourselves dealing with lawyers from other countries. Many large insurance claims arise out of very high profile incidents, thereby offering
the opportunity to act for insurers in the legal fallout.
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