Claims Control Clause
The claims control clause gives the (re)insurer or programme leader the right to control investigation, defence and settlement of a claim in whole or in part, typically drafted as a condition precedent to its own liability.
- Clause type
- Condition
- Origin/Market
- International programme
- Favours
- Insurer
- Negotiability
- Negotiable
Purpose
Particularly in facultative reinsurance and international programmes where the primary insurer or cedent retains only a small share, the (re)insurer wants to prevent claims being settled without its involvement even though it bears most of the exposure. The claims control clause therefore gives it the right to direct investigation, defence and settlement negotiations itself, or to appoint its own representatives to do so.
Effect and limits
Compliance with the clause is typically drafted as a condition precedent to liability: if the cedent or programme leader breaches it, this can jeopardise the entire indemnity — though the burden of proving such a breach rests with the (re)insurer. The clause only confers control over claims actually notified under the relevant policy, not automatically over the cedent’s communications with third parties outside that framework. In some jurisdictions (for example the Philippines) its use is regulatorily restricted or prohibited.
Negotiation and practice
It differs from the related claims cooperation clause in that the latter only imposes a duty on the cedent to notify and seek consent, whereas the claims control clause transfers actual control to the (re)insurer. Programme leaders should clearly define notification and escalation channels in the contract to avoid disputes over the scope of the control transferred.