Reinsurance: back-to-back cover

There is a generally recognised presumption that, in the case of proportional reinsurance, the insurance and the reinsurance are to be construed back to back so as to provide consistency of cover. That presumption is particularly important where the wording of the two contracts is more or less the same and the premium paid by the reinsured matches the premium received by the reinsured.

However, if the wording of the two contracts is deliberately different, the presumption is almost by definition ousted. MetLife Insurance Ltd v RGA Reinsurance Company of Australia Ltd [2016] NSWSC 980, a decision of McDougall J, illustrates the point.