Do You Know That Loss Transfer Can Make You Stress-Free?

Loss transfer is an instrument by which, under specific conditions, automobile insurers who reimburse no-fault benefits may be compensated by another insurer for all or part of a claim. Cities like New York provide a reimbursement insurer with what is inferred as loss transfer.

Understanding the Loss Transfer

To put simply, loss transfer is an alternative to reclaim from the lenient motorist’s vehicle insurer the first-party services. The reimbursement insurer is obligated to compensate as an outcome of the accident.

Loss transfer allows an insurer reimbursing accident coverages to be compensated by another insurer for all or a portion of the accident benefits spent on an insured person under specific ailments.

The Insurance Act suggests automobile insurers compensate accident benefits to insured persons when injured in motor vehicle accidents. However, in some cases, the first party insurer is accountable for the reimbursement of the statutory accident benefits and authorized to be repaid by another insurer called the second party insurer. This indemnification entitlement is called loss transfer.

Enforcement of loss transfer

A plea for loss transfer is generally preceded by a notification to the second party insurer from the first party insurer. It is a reinsurance agreement where an insurer cedes policies to a reinsurer.

The second party insurer asks for information regarding the claimant. It is authorized to debate the payment’s worth.


However, courts and arbitration verdicts have made the process of loss transfer complicated over the years. Following are some of the things for insurers to judge when confronted in the procedure.

  • It has a two-year restriction period for initiating an arbitration of loss transfer. Court decided that there is a rolling limitation period in most of the loss transfer cases.
  • Often disputes arise about what comprises a heavy commercial vehicle. This is interpreted as a commercial vehicle with a total vehicular weight greater than 4,500 kg. But the fact is, concluding this gross weight of the vehicle can be difficult during the loss.
  • Lump-sum concessions of statutory accident benefits claims are liable to lose transfer.
  • A second party insurer repaying the first-thirty insurer must document such payments as accident benefit payments and not as a detriment.
  • In states like Ontario, a fault chart oversees the regulation of indemnity, and therefore debates arise as to the pertinence of a particular regulation from the fault chart. The liability is determined by ordinary rules of law when no specific rule applies. Often this demands the arbitrator to perform a small trial on the issue, which pertains to the viva voce testimony of the drivers and any observers to the accident.


A loss transfer is but a reinsurance agreement or contract in which policies are ceded by an insurer, particularly ones that have incurred casualties to a reinsurer earlier. In incidents like a loss portfolio transfer, a reinsurer infers and ratifies an insurer’s forthcoming lawsuit liabilities through the loss revenue transfer from the insurer. This is another way of risk financing.