Legal Analysis Of The Application Of Reinsurers’ Subrogation Rights

Reinsurance, also known as insurance’s insurance, is a very important part of thewhole insurance system. Subrogation, as a derived principle of the principle ofcompensation for insured losses, also occupies a crucial position within the wholefield of insurance law.However, because the reinsurance business started a little late inChina, the reinsurance market is far away from well-established. Therefore, ourunderstanding of reinsurance still is still limited to the traditional theoretical level.Many problems still remain controversial, and our studies on subrogation rights arealso limited to the shallow introduction and discussion on some basic questions. Therestill lacks a comprehensive and scrupulous legal system of it, and there also existsome inter-conflicts and inter-contradictions. With regard to the application ofsubrogation rights applied in the field of reinsurance, we can easily find thetheoretical arguments including positive, negative and elective opinions, and thesemake people feel definitely confused. In order to get rid of such confusion, on thebasis of the use of case analysis, comparative analysis, as well as legal analysismethods, the author manages to figure out the legal foundations for the possibility andreasonability of the application of reinsurers’ subrogation rights. On the other hand,the author also manages to breakthrough the theoretical obstacles on the application ofsuch subrogation rights. Eventually, the author tries to establish the theory concerningthe application of the reinsurers’ subrogation rights. The whole thesis is divided into the following four parts:The first part is about the theory of the application of reinsurers’ subrogationrights. According to a real case, here we have the main point of this topic, which is ifthe reinsurers should be entitled the subrogation rights. Then, the author introducesseveral different views and the corresponding reasons for the above mentionedquestion. Finally, according to the understanding of the value of justice, as well as thereality that some countries’ cases have already indicated the applicability of thereinsurers’subrogation rights. However, in order to fully prove the said point, we needto comprehensively analyze it on the basis of the fundamental theories of thereinsurance system and the subrogation rights system, to figure out the legalfoundations for the application of the reinsurers’ subrogation rights, to wipe out thetheoretical obstacles thereof, and to establish the reinsurers’ subrogation rightssystem.The second part is about the legal basis of the application of the reinsurers’subrogation rights. This part is mainly about the in-depth and detailed legal analysisconcerning the application of the reinsurers’ subrogation rights. Here the authormanages to discuss the said point from the following five perspectives, in order toprovide sufficient legal foundations:The statutory transfer of the subrogation rights: based on the theory of statutorytransfer of the obligatory rights, after the reinsurers pay its share of the insurancepremium, the insurers’ right of subrogation against the third party should betransferred to the reinsurers. The application of subrogation rights on liabilityinsurance: Based on the nature of the reinsurance contract which is the same as theliability insurance contract, it is possible for the subrogation rights to be applied onthe reinsurance contracts. Principle of Justice in Civil law: The purpose of the systemof the subrogation rights is to realize justice. According to the purposive explanatorymethod, to bring such justice to the field of reinsurance exactly realizes the principleof justice in Civil Law, because this will equally balance the profits and interests of allthe parties of the insurance and reinsurance contracts. The principle of the samedestiny in reinsurance system: because the reinsurer and the original insurer are on thesame boat, according to their same fate, they should simultaneously own the rights ofsubrogation. The function of reinsurance system: to give reinsurers the rights ofsubrogation and to safeguard the legal rights and interests of the reinsurers can lead to a stable development of the reinsurance business industry and a positive influence onthe stability of the society. It can also lead to the realization of the effective value ofthe reinsurance system.The third part is about the breakthrough of the theoretical obstacles on theapplication of the reinsurers’ subrogation rights. This part is mainly about the refusionof the reasons provided by the negative theory. Here the author manages tobreakthrough the theoretical obstacles of the application of the reinsurers’ subrogationon a negative perspective. Regarding the relativity of a contract, based on the natureof the reinsurance as the liability insurance, there exists a possibility of thebreakthrough of the relativity of a contract. Thus the same conclusion can beanalogized to the application of reinsurers’ subrogation rights. Based on theapplicability of the subrogation rights on liability insurance, the reinsurers may alsobe entitled the rights of subrogation. Regarding the unreality of the exercise ofReinsurers’ subrogation rights: the author contends that, actually, it will be a logicalmistake if we firstly assumed the reinsurers’ subrogation rights exist, and then deny itjust because of the unreality of the exercise of such subrogation rights.The problemconcerning the unreality can be solved by other means, however we can notabsolutely deny the fact that the reinsures actually should be entitled the saidsubrogation rights. Then the author contends that, we may admit the exist ofreinsurers’ subrogation rights, and then try to solve the difficulties on the exercise ofthe said reinsurers’ subrogation rights by means of a legislation of“share back” mode,in order to realize the possibility of the exercise of such rights.The conclusion part is about the legislative suggestions concerning theestablishment of the reinsurers’ subrogation rights. The author manages to explain theprinciple of the freedom of contract provided by the laws, while there are not anyspecific legal regulations in other foreign countries.However, in order to avoid thedisputes concerning the reinsurance contracts and the embarrassment faced by thejudges because of relevant theoretical difficulties and legislative blank, it is stillnecessary to make some legal provisions and supplements with regards to the basicissues of the reinsurance system. Regarding the legislative question concerning theapplication of reinsurers’ subrogation rights, the legislator should clarify the thecharacteristic of the reinsurance contract and establish the legislation of subrogationrights. The legislator should confirm the applicability of the subrogation rights in thereinsurance field, breakthrough the rigor principle of the relativity of contract, and make it possible to apply the subrogation rights on the reinsurers.