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⚖️ '''Several liability''' is a legal principle under which each [[Definition:Insurance carrier | insurer]] or [[Definition:Reinsurer | reinsurer]] participating in a risk is responsible only for its own specified share of any [[Definition:Insurance claim | claim]] or obligation, rather than being liable for the entire amount. This stands in direct contrast to [[Definition:Joint liability | joint liability]] or joint-and-several liability, where any single party could be required to pay the full loss and then seek [[Definition:Contribution | contribution]] from co-participants. Several liability is the foundational allocation mechanism in [[Definition:Subscription market | subscription markets]] such as [[Definition:Lloyd's of London | Lloyd's]] and the London company market, where multiple [[Definition:Lloyd's syndicate | syndicates]] or insurers each take a defined percentage [[Definition:Line | line]] on a [[Definition:Slip | slip]], and it is equally embedded in most [[Definition:Reinsurance treaty | reinsurance treaty]] structures worldwide.

🔧 In practice, several liability is given effect through the [[Definition:Slip | slip]] or [[Definition:Reinsurance contract | contract]] wording, which explicitly states each participant's percentage share. When a covered loss occurs, the [[Definition:Policyholder | policyholder]] or [[Definition:Ceding company | cedant]] collects from each subscribing market only in proportion to that market's written line — if a [[Definition:Syndicate | syndicate]] wrote 10 percent of a risk and the claim totals one million dollars, it owes exactly one hundred thousand dollars. This structure means that if one participant becomes [[Definition:Insolvency | insolvent]], the remaining participants are not required to absorb its share; the shortfall falls on the insured or cedant unless separate [[Definition:Insolvency clause | insolvency]] protections apply. The principle is codified or reinforced by market-standard clauses — for instance, the Lloyd's several liability clause, the London Market Association's [[Definition:Market Reform Contract (MRC) | Market Reform Contract]] wording, and equivalent provisions used across European and Asian reinsurance markets. Under [[Definition:Solvency II | Solvency II]] and similar regimes, several liability influences how [[Definition:Counterparty risk | counterparty default risk]] is modeled, since each participant's failure affects only its proportionate share.

💡 The significance of several liability extends well beyond contract drafting — it shapes how [[Definition:Broker | brokers]] construct panels, how [[Definition:Underwriter | underwriters]] price participation, and how [[Definition:Credit risk | credit risk]] is managed across the placement chain. Because each insurer bears only its own share, brokers and insureds must carefully evaluate the [[Definition:Financial strength rating | financial strength]] of every participant on a [[Definition:Security list | security list]], knowing there is no safety net of cross-subsidization if one market defaults. This individual accountability also encourages disciplined [[Definition:Underwriting | underwriting]], since each participant bears the consequences of its own risk selection without dilution across the panel. Several liability thus underpins the efficient functioning of multi-party risk transfer — enabling large or complex risks to be shared among many markets while keeping each party's exposure clearly bounded and independently manageable.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Joint liability]]
* [[Definition:Subscription market]]
* [[Definition:Lloyd's syndicate]]
* [[Definition:Slip]]
* [[Definition:Insolvency clause]]
* [[Definition:Security list]]
{{Div col end}}

Definition:Several liability - Revision history

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