Across global reinsurance markets, reinsurers and cedents are negotiating—and, in some cases, litigating or arbitrating—the cession of substantial COVID losses under catastrophe excess-of-loss reinsurance treaties (“CAT XLs”). Anecdotally, a substantial number of these losses fall under event and travel cancellation and business interruption policies. The disputes are largely about aggregation—pooling individual losses into a single “loss occurrence” for purposes of retention and indemnity limits. A significant fault line in these debates is whether cedents can aggregate losses across jurisdictional lines (for example, business interruption resulting from March 2020 closure orders in New York, New Jersey, and Connecticut).
1.3.2022