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The reinsurance covered risks on terms "as original" and "to
pay as may be paid thereon and to follow without question the settlements
of the reassured except ex gratia and/or without prejudice settlements".
Generali sought to rely on this clause in defence to the reinsurers'assertion
that they were not liable since the loss did not fall within the risks
covered by the underlying policy and the reinsurance contract. The court
found that the words "without question" related to how reinsurers
were required to follow settlements but did not qualify what they had
agreed to follow. Hence Generali did not have to prove that the loss
fell within the risks covered by the underlying insurance policy, but
did have to prove that the claim recognised by it by way of settlement
fell within the reinsurance contract as a matter of law and also that
Generali had acted honestly and had taken all proper and businesslike
steps in making the settlement..
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