{
  "id": "clause-follow-the-settlements",
  "type": "clause",
  "languages": {
    "en": {
      "id": "clause-follow-the-settlements",
      "lang": "en",
      "type": "clause",
      "title": "Follow the Settlements Clause",
      "shortDefinition": "The follow-the-settlements clause contractually obliges the reinsurer to accept the cedent's claims settlement, provided it falls within the terms of the original policy and is made in good faith, without re-examining liability or quantum.",
      "synonyms": [
        "Claims settlement clause"
      ],
      "linesOfBusiness": [
        "Reinsurance"
      ],
      "jurisdictions": [
        "Global"
      ],
      "tags": [
        "Reinsurance",
        "Claims management"
      ],
      "relations": {
        "relatedTerms": [
          "clause-follow-the-fortunes",
          "term-cedent",
          "clause-claims-cooperation"
        ],
        "partOf": [],
        "appliesTo": [
          "term-treaty-reinsurance"
        ],
        "regulatedBy": [],
        "relevantFor": [],
        "insurableVia": [],
        "mitigatedBy": [],
        "comprises": [],
        "alternativeTo": [],
        "complementedBy": []
      },
      "attribute": null,
      "profile": null,
      "coverageProfile": null,
      "clause": {
        "kind": "condition",
        "origin": "reinsurance-market",
        "favours": "insured",
        "negotiability": "standard",
        "standardWordings": []
      },
      "legalBasis": [],
      "standards": [],
      "reviewStatus": "expert-reviewed",
      "reviewedBy": "Guido Hesse, Hesse Group Holding AG",
      "lastReviewed": "2026-09-04",
      "version": "0.1.0",
      "updated": "2026-09-03",
      "generated": {
        "by": "cursor-agent/claude-sonnet-5",
        "at": "2026-09-03T00:00:00.000Z"
      },
      "verified": [
        {
          "by": "human:ghesse",
          "at": "2026-09-04T00:00:00.000Z",
          "method": null
        }
      ],
      "staleAfter": null,
      "url": "https://hgh.ch/lexikon/en/knowledge/clause/follow-the-settlements-clause/",
      "alternateUrl": "https://hgh.ch/lexikon/de/wissen/klausel/follow-the-settlements-klausel/",
      "body": "## Purpose\n\nWhile follow the fortunes is treated as an unwritten principle, the follow-the-settlements clause makes the binding effect an express term of the contract: the reinsurer agrees to accept a claims settlement made by the cedent where it falls within the terms of the original policy, is commercially reasonable and does not breach the reinsurance conditions. The clause developed mainly in English-language reinsurance markets in response to court decisions that declined to imply a binding effect absent an express clause.\n\n## Effect and limits\n\nThe clause prevents the reinsurer from re-litigating every settlement decision taken by the cedent after the event. It does not bind the reinsurer for payments outside the scope of cover, for fraud, or for clearly improper claims handling. The precise wording – whether \"follow the settlements\" or \"follow the fortunes\" is used – can be interpreted differently by courts, which is why precision in the contract language matters.\n\n## Negotiation and practice\n\nReinsurers frequently seek additional information or consent rights (claims cooperation or claims control clauses) to limit the control risk associated with the binding effect. Drafting should ensure a clear interplay with those clauses."
    },
    "de": {
      "id": "clause-follow-the-settlements",
      "lang": "de",
      "type": "clause",
      "title": "Follow-the-Settlements-Klausel",
      "shortDefinition": "Die Follow-the-Settlements-Klausel verpflichtet den Rückversicherer vertraglich, die Schadenregulierung des Zedenten zu akzeptieren, sofern sie innerhalb der Bedingungen des Originalvertrags und in gutem Glauben erfolgt, ohne Haftung und Schadenhöhe neu zu prüfen.",
      "synonyms": [
        "Follow the Settlements",
        "Schadenregulierungsklausel"
      ],
      "linesOfBusiness": [
        "Rückversicherung"
      ],
      "jurisdictions": [
        "Global"
      ],
      "tags": [
        "Rückversicherung",
        "Schadenmanagement"
      ],
      "relations": {
        "relatedTerms": [
          "clause-follow-the-fortunes",
          "term-cedent",
          "clause-claims-cooperation"
        ],
        "partOf": [],
        "appliesTo": [
          "term-treaty-reinsurance"
        ],
        "regulatedBy": [],
        "relevantFor": [],
        "insurableVia": [],
        "mitigatedBy": [],
        "comprises": [],
        "alternativeTo": [],
        "complementedBy": []
      },
      "attribute": null,
      "profile": null,
      "coverageProfile": null,
      "clause": {
        "kind": "condition",
        "origin": "reinsurance-market",
        "favours": "insured",
        "negotiability": "standard",
        "standardWordings": []
      },
      "legalBasis": [],
      "standards": [],
      "reviewStatus": "expert-reviewed",
      "reviewedBy": "Guido Hesse, Hesse Group Holding AG",
      "lastReviewed": "2026-09-04",
      "version": "0.1.0",
      "updated": "2026-09-03",
      "generated": {
        "by": "cursor-agent/claude-sonnet-5",
        "at": "2026-09-03T00:00:00.000Z"
      },
      "verified": [
        {
          "by": "human:ghesse",
          "at": "2026-09-04T00:00:00.000Z",
          "method": null
        }
      ],
      "staleAfter": null,
      "url": "https://hgh.ch/lexikon/de/wissen/klausel/follow-the-settlements-klausel/",
      "alternateUrl": "https://hgh.ch/lexikon/en/knowledge/clause/follow-the-settlements-clause/",
      "body": "## Zweck\n\nWährend Follow-the-Fortunes als ungeschriebener Grundsatz gilt, macht die Follow-the-Settlements-Klausel die Bindungswirkung ausdrücklich zum Vertragsinhalt: Der Rückversicherer verpflichtet sich, eine Schadenregulierung des Zedenten zu übernehmen, wenn sie innerhalb der Bedingungen der Originalpolice liegt, kaufmännisch vertretbar ist und nicht gegen die Rückversicherungsbedingungen verstösst. Die Klausel entstand vor allem in englischsprachigen Rückversicherungsmärkten als Reaktion auf Gerichtsentscheide, die eine implizite Bindungswirkung ohne ausdrückliche Klausel verneinten.\n\n## Wirkung und Grenzen\n\nDie Klausel verhindert, dass der Rückversicherer jede Regulierungsentscheidung des Zedenten im Nachhinein neu verhandelt. Sie bindet aber nicht bei Zahlungen ausserhalb des Deckungsumfangs, bei Betrug oder bei offensichtlich unsachgemässer Schadenbearbeitung. Die genaue Formulierung – insbesondere ob «follow the settlements» oder «follow the fortunes» verwendet wird – kann vor Gericht unterschiedlich ausgelegt werden, weshalb Präzision in der Vertragssprache wichtig ist.\n\n## Verhandlung und Praxis\n\nRückversicherer verlangen häufig ergänzend Informations- oder Zustimmungsrechte (Claims-Cooperation- oder Claims-Control-Klauseln), um das mit der Bindungswirkung verbundene Kontrollrisiko zu begrenzen. Bei der Vertragsredaktion ist auf ein klares Zusammenspiel mit diesen Klauseln zu achten."
    }
  }
}