The reinsurance broker prior to the conclusion of a contract of reinsurance, whilst acting as an agent for the ceding company is in duty to disclose every information material to the risk, i.e which could influence the judgment of a prudent reinsurer in assessing and/or accepting the risk.

Any failure to do so leading to enable the reinsurer to avoid the risk. It can be often the case that a first reinsurance broker (producing broker) instructs another reinsurance broker (placing broker) to place the risk directly with reinsurers.

In such a situation, and in case of a material fact known by the producing broker but not disclosed to the placing broker, an issue could arise whether to know if reinsurers could impute this non-disclosure of material fact directly to the placing broker?

Since the international reinsurance customs and practice have been largely influenced by the common law, and more particularly by the Lloyd’s of London’s, this article will be focused on precedents rendered by common law’s jurisdictions.

I: Only the knowledge of the placing broker could be imputed to the reinsurers:

In a case, Blackburn Low and Co.v. Vigors(1887) 12 App.Cas.531, the reinsurer claimant and the actual placing broker were not aware of any material facts. The question was to know whether the knowledge of the producing broker who did not disclose to the placing broker would be imputed to the reinsurers.

It was argued that the reinsurance contract could not be avoided “because the authority of the producing broker had ended before the reinsurance in question had been effected, and thus only the knowledge of the placing broker who actually effected the reinsurance could be imputed to the reinsurers”, the placing broker who was unaware of the said information material to the risk.

II: Same principle to be followed in case of a binding authority:

In another case, Simner v.New India Assurance Co. Limited (1995) L.R.L.R. 240, a reinsurer was participating on an original policy underwritten through a binding authority, delegated to a coverholder.

No loss statistics were given to the reinsurer by the coverholder. The reinsurer, did instruct another reinsurance broker to place a stop loss reinsurance on their share of the original policy, with the knowledge that there were no claims figures.

It finally appeared that the coverholder managing the binding authority was in fact aware of a larger number of claims affecting the said risk.

Since the amount of losses were considerable, the stop of loss ’reinsurers intended to avoid the stop loss reinsurance based on non-misrepresentation and non-disclosure.

The court held that there had not been any misrepresentation whatsoever by the reinsurance broker placing the stop loss reinsurance, “as the facts i.e non-disclosure of claims figures were not actually known to the reinsurance broker when the reinsurance contract was presented and signed by the stop of loss reinsurers.”


It appears clearly that a reinsurance contract could not be avoided by reinsurers, based on the non-disclosure and/or misrepresentation of facts by the original producing broker, and that only the knowledge of the placing broker who had actually effected the reinsurance could be imputed to  reinsurers.