Post on 04-Jan-2016
LIMITATION PERIOD INSURANCE AND REINSURANCE
Report no. 8 – Reinsurance Working Party
Peggy Sharon, Adv.Levitan, Sharon & Co.
Israel
Presentation at AIDA Budapest26th November 2008
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Limitation Period – Why?
Balance between conflicting interests:
• Claimant: to enforce right through legal proceedings
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• Defendant: to be discharged of being subject to a potential court claim
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Limitation Period – General(Contractual Claims)
3 years
5 years
7 years
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Limitation – Procedural or Substantive?
Most jurisdictions - substantive.
Expiration of the limitation period – extinguishes the right
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Limitation – Procedural or Substantive?
Israel, UK and USA -procedural.
Expiration of the period – bars the remedy
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Commencement
The limitation period commences on the day on which the cause of action accrued;
• the date of the violation of the right, or
• When the obligation becomes due.
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Circumstances affecting the Period
Fraud
• Fraud - the limitation period does not commence until the fraud is discovered
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Admission of Liability – Stay of the Running
• The limitation period is suspended and begins to run anew by the debtor’s express admission of the debt
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Special (Personal) Circumstances
• Minors, mentally disturbed persons, or matrimonial relationships – stay of limitation period or delayed commencement.
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Stipulation regarding the limitation period - Possible?
• No: The length of the limitation period is regulated by the law and the parties are not at liberty to change it.
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• Yes: In the majority of legal systems, the parties are free to stipulate regarding the limitation period by agreement.
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Reinsurance Claims
Are there specific laws regarding these claims?
In most countries - no specific rules apply to reinsurance claims.
NOYES
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Specific rules concerning limitation period for reinsurance claims –
two years.
Specific Rules in Marine and Aviation – five years.
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Commencement of Limitation Period in Reinsurance
Reinsurance Contract - Contract of Indemnity.
On what date the cause of action of the reinsured accrues? Different answers.
??
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Commencement - Reinsurance
Possible Dates:
•The day on which the cedent paid the original insured
In the USA: reinsurer's obligations under the reinsurance contract are not triggered until at least when the ceding company paid a claim.
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• The date of judgement/settlement against the cedent – establishment of liability:
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• The date of the occurrence – the insured event
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Cut-Through Clause
Undeveloped Areas
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• Does it change the relationship of the Original Insured vs Reinsurer to be identical to direct insurance, including for purposes of the Limitation Period?
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Cut-Through Clause
• Assignment of right – including the period to enforce it – as in contracts?
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Cut-Through Clause
• Direct privity towards Reinsurer – direct insurance claim – shorter period
Thank You
תודה
Köszönöm
LIMITATION PERIOD INSURANCE AND REINSURANCE
Report no. 8 – Reinsurance Working Party
Peggy Sharon, Adv.Levitan, Sharon & Co.
Israel
Presentation at AIDA Budapest26th November 2008