Practice question
A direct insurer with limited capital accepts a large fire risk and obtains reinsurance. After a covered loss it argues the policyholder must have impliedly agreed to look solely to reinsurers because no one could expect it to retain the entire risk. No such sole-recourse clause or release exists. Under Artex, which is correct?
- Large risk conclusively proves sole recourse
- Capital size always changes the policy’s named obligor
- Reinsurance and capital size alone do not establish the claimed release of the direct insurer.
- The policyholder automatically becomes a reinsurer
- The risk’s size makes all insurance illegal
Legal references
- Artex Development Co. v. Wellington Insurance Co., G.R. No. L-29508, June 27, 1973, main decision: https://lawphil.net/judjuris/juri1973/jun1973/gr_29508_1973.html
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