Leading Insurer Clause (Führungsklausel)
The leading insurer clause provides that a lead insurer in a co-insurance arrangement decides on behalf of all participating insurers regarding policy amendments and claims settlement.
Concept
The leading insurer clause is a contractual provision within a co-insurance arrangement under which a lead insurer makes certain decisions, particularly regarding policy amendments and claims settlement, on behalf of all co-insurers participating in a risk, with binding effect on the other co-insurers.
Mechanism
The lead insurer usually negotiates the original policy terms and premium with the policyholder or its broker, while the other co-insurers follow those terms on a proportional basis (following); in the event of a claim, the lead insurer regularly decides on the existence and amount of the obligation to pay benefits, without the following insurers having to re-examine that decision internally.
Practical Significance
The leading insurer clause significantly reduces the administrative burden of managing co-insurance contracts, since not every individual co-insurer needs to be separately involved in contract negotiations and claims settlement; the clause also establishes a particular relationship of trust between the following insurers and the leader, whose decisions they generally follow.