Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

FASB invites comments on possible change in risk accounting

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The Financial Accounting Standard Board has issued an invitation to comment on a proposal to require policyholders to treat a portion of many types of policies as deposits, recording premiums for risk transfers as expenses and insurance recoveries as gains in income. This proposal was prompted, at least in part, due to perceptions that companies have used finite reinsurance arrangements with little risk transfer to “improve” their financial statements.

UK Court finds lack of authority for reinsurance agreement

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The UK Commercial Court has held that a reinsurer is not bound by a contract signed by an agent, supposedly on its behalf, due to the lack of authority to do so, rejecting contentions that the agent had ostensible authority to do so, or that the reinsurer had ratified the contract. ING Re (UK) Limited v. R & V Versicherung AG, [2006] EWHC 1544 (Commercial Court June 29, 2006).