Claims-Sharing Agreement (Teilungsabkommen)

Concept

A claims-sharing agreement is a framework arrangement concluded between several insurers under which, for certain frequently occurring loss scenarios with unclear or disputed liability shares between the policyholders involved, a costly individual review of the liability question is waived, and the loss is instead split between the participating insurers according to a fixed formula set out in the agreement.

Mechanics and Areas of Application

Claims-sharing agreements are typically used for high-volume loss scenarios with a recurring, similar pattern, such as traffic accidents with an unclear right-of-way situation or collisions involving several vehicles; instead of establishing the exact liability share in each individual case through litigation or negotiation, the loss is split according to a pre-agreed percentage, regardless of the actual degree of fault in the specific case.

Economic Significance

The key advantage of claims-sharing agreements lies in the significant reduction in administrative burden and settlement time for all participating insurers, since costly fact-finding and disputes over the liability share are avoided in the vast majority of cases; while the fixed split may deviate from the actual liability position in an individual case, this evens out statistically across the large number of cases settled under the same agreement.