Practice question
The reinsurer refuses to pay the original insurer. A covered policyholder claim is otherwise established, and no policy defense, release or novation exists. The original insurer relies only on that reinsurance dispute to refuse its own payment. Which is correct?
- Every reinsurance dispute automatically suspends all direct obligations
- The separate dispute alone does not cancel the direct policy responsibility.
- The policyholder must always abandon the original policy
- Only shareholders may seek recovery
- The reinsurer’s silence automatically voids the original policy
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
- Insurance Code, as amended by RA 10607, Sections 26-48 and 97-100: https://lawphil.net/statutes/repacts/ra2013/ra_10607_2013.html
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