Legal Analysis Of The Application Of Reinsurances’ Subrogation Rights

Based on the Swiss Re Sigma data, the total economic loss worldwide due tonatural disasters and man-made disasters reached$130billion in2013, the globalinsurance company damage amounted to$44billion, but because of the globalreinsurance market, insurers overall underwriting capacity haven’t been affectedsubstantially.Reinsurance, also known as "insurers’ insurance", that is purchased byan insurance company (the "ceding company" or "cedant" or "cedent" under thearrangement) from one or more other insurance companies (the "reinsurer") directlyor through a broker as a means of risk management, sometimes in practice includingtax mitigation and other reasons described below. Reinsurance is normallyfunctioned to make risk transfer, income smoothing, surplus relief, arbitrage andcreating a manageable and profitable portfolio of insured risks.Due to the late start of reinsurance in China, the reinsurance infrastructure isnot yet mature and sound. Particularly in relation to reinsurance legal system, thereare still many gaps, which leads to the many disputes during the case trial on thequestions such as whether a reinsurer holds the subrogation right, how to exercisethe subrogation right. The author analyzes the theoretical basis of the subrogationright of the reinsurer and probes into the exercises of the reinsurers’ subrogationright. Expect for the introduction, this dissertation consists of five chapters.In the first chapter, one of the reinsurance case is presented. The problemsassociated are if the reinsurers have the subrogation right and how to use it.The second chapter is the theoretical basis. It introduces the implication of thereinsurer and the insurance subrogation. The author emphasizes on the analysis ofthe nature of the reinsurance contract. The conclusion that the reinsurancecontracts possess the characteristic of liability insurance, which constitutes thetheoretical basis of the possession and the exercises of reinsurers’ subrogation right.The third chapter is the affirmation of the reinsurers’ subrogation right.Compared the two anti-theories and the national legislation of reinsurers’subrogation, the author affirms the subrogation of reinsurers by analysis the nationof reinsurance contact, the statutory transfer of the subrogation, the legal contextexplanation, the damages principle in common insurance and the Insurance Fortunesof reinsurance.The forth chapter is about the exercise of reinsurance subrogation. The authorrefers the method that the ceding company to use the subrogation and return the lostto the reinsurer. Also there are two the limitation of the exercise. One is the Statuteof limitations; the other is the payment order of subrogation.In the conclusion, combined the legislative structure, system Construction andthe reinsurance supervision, several suggestions are listed by concerning the rightprotection of the reinsurers.