Claims cooperation clause
A clause requiring the cedant to inform and consult the reinsurer on a claim, without ceding control of it.
A claims cooperation clause obliges the cedant to notify claims above a threshold without delay, to pass on documents, and to consult the reinsurer before any material settlement. It stops short of control: the decision stays with the cedant, which must listen but need not comply. The problem it solves is late information, which denies the reinsurer any chance to act usefully, to reserve correctly and to adjust its own retrocession. It is the usual middle ground between a follow the fortunes clause, which binds the reinsurer to the cedant's decisions almost blindly, and claims control, which takes the claim out of its hands. The sensitive point is the sanction: depending on the drafting, failure to cooperate forfeits the right to recover outright, or only entitles the reinsurer to damages for the prejudice caused. The first wording is draconian, since it turns an administrative oversight into an outright loss of cover, and the point is heavily arbitrated.
A cedant notifies an 8 million euro construction claim in 2026, eighteen months after being served with the suit, although the clause required notice within thirty days. The reinsurer pleads forfeiture. The arbitral tribunal reads the wording as carrying a proportionate sanction and reduces the recovery by 900,000 euros, the extra defense cost caused by the late notice, instead of disallowing the whole 5 million above the retention.
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