Follow-the-Fortunes Doctrine Law and Legal Definition

Follow the fortunes doctrine is a principle applicable to the Insurance law. According to this rule, a reinsurer is bound by the reinsured's decisions regarding payment of settled claims so long as the decision was made reasonably and in good faith. It is a burden-shifting doctrine that allows the reinsured the freedom of making good-faith claims decisions without the fear of having to relitigate those decisions with its reinsurer. This rule prevents the reinsurer from second-guessing a reinsured's good-faith decision to pay a claim which is not covered under the original insurance policy.