ABSTRACT
Reinsurance involves international transactions, for instance a Turkish insurer may insure a local risk and reinsure the risk in London. Proportional and non-proportional reinsurance contracts may be in the form of facultative, obligatory or facultative obligatory. If facultative reinsurance is proportional, that contract transfers a single risk to the reinsurer. By virtue of a unilateral offer obtained from the reinsurer, a broker, while visiting the Boxes at Lloyd's, may be able to inform the insurers that in the case of subscription to the original risk, the reinsurance cover for such risk has already been obtained. The reinsurers argued that they were not liable as the settlement amount covered expenses incurred outside the terms of the reinsurance. The House of Lords decided in favour of the reinsurers. The reinsurance provided different definitions for the crucial wordings determining the insurers' liability, thus, while the reinsured was liable under the policy, the reinsurers were not.
