Subrogated recoveries

An accessible reference point to assist insurers in their immediate considerations relating to subrogated recoveries in 15 jurisdictions across Asia and in England and Wales

The principle of subrogation is recognised and enshrined in many legal systems, particularly in the context of insurance relationships. Common law practitioners often refer to insurers “standing in the shoes” of their insureds to take the benefit of their rights and remedies against third party wrongdoers. The rationale for this is simple: as insurers have paid monies to their insured that otherwise the insured could have sought to recover from a third party, insurers therefore become entitled to enforce those rights.

With ever increasing globalisation, insurers and reinsurers are typically underwriting risks in a plethora of jurisdictions. Just as policies are often written subject to the local laws in jurisdictions where risks are located, often recoveries fall to be pursued in those locations. The emergence of new and developing markets with rising levels of insurance penetration and the increasing complexity of supply chains also mean that insurers must consider potential recoveries in a range of jurisdictions around the globe with wildly different governing laws, procedures and court systems. At the same time (due to market conditions) insurers are increasingly focused on “getting something back” and the value which recoveries can have to their balance sheets.

While many international claims professionals will consider they have a good understanding of policy provisions relevant to subrogation and how recovery actions are likely to operate, this understanding may be founded on principles of systems they are familiar with (such as English law). However differing legal systems and local application of contractual terms can lead to very different, and often surprising, results.

Within the confines of a comparative booklet of this size, it is not possible to provide a definitive statement of all law and procedure relevant to subrogation in 15 jurisdictions and legal systems across Asia Pacific (not to mention our “starting point”, England and Wales). However working with our friends and colleagues in some of the leading regional legal practices, we have endeavoured to provide an accessible reference point to assist insurers in their immediate considerations, prior to seeking more substantive advice.

The brochure discusses various issues relevant to the pursuit of subrogated recoveries, including:

• Investigations which may be undertaken to assess asset-worthiness and/or preserve assets
• The point at which insurers may commence subrogated recovery proceedings
•  Limitation periods (time bar) applicable to subrogated actions
• Allocation of costs of recovery proceeding
• Steps required to enforce judgments.