Claims control clause

A claims control clause hands the reinsurer the conduct of claims above an agreed threshold: it appoints the adjuster, directs the defense, and no settlement goes ahead without its consent. The cedant remains solely liable to its insured, but loses control of how the file is resolved. The problem it solves is misaligned incentives: on a high layer the cedant has nothing left to lose above its retention and may settle fast and generously, to protect a commercial relationship, with someone else's money. Control puts the decision back with the party that pays. It differs from the softer cooperation clause, which requires information and consultation without giving it the final say. The cost to the cedant is heavy: control exercised clumsily can cost it the client relationship, and exposes it to the charge of having abandoned the handling of a file for which it remains legally answerable to the insured and to its regulator.