Keywords
reinsurance
How to Cite
Abstract
This article analyses fronting from both the practical and the legal perspective, as a frequent business practice in the reinsurance market. Fronting represents advantages for the parties involved, allowing them to develop certain business which they perhaps would not otherwise be able to accomplish. At the same time, however, fronting can cause a series of complications, not only for its participants (especially for the Cedant and Original Insured) but also for the controlling authorities, who act when the Cedant or Reassured fail to fulfill their obligations. In this last sense, the difficulties that the authorities confront in order to regulate and control this type of operation will also be analyzed. Finally, fronting presents very special characteristics that cause many principles usually applied to other reinsurance contracts to have a relative application in cases of fronting operations. For example, the
Reinsure could not, in principle, while controlling the liquidation of the claims, allege that the Cedant was negligent in managing said liquidation.
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