We shall also advise of any charges additional to the reinsurance premium. Each clause in a reinsurance agreement has its own history and specific purpose. Ill give you some background as to how and why this project got started and why there is an interest in the development of guidelines for reinsurance treaty language. Article table of contents page i automatic coverage 4 ii facultative reinsurance 5 iii facultativeobligatory reinsurance 6 iv guaranteed capacity reinsurance 7 v premiums 8 vi administration 9 vii reserves 11 viii dac tax regulations 12 ix errors and omissions x expense of original policy 14 xi changes in retention and recapture privileges 15 xii. Reinsurance industry practices have changed in recent years, placing more and more emphasis and importance on reinsurance contract wordings. Helps maintain good will with insureds, regulators, and calm uncertainty about outstanding policy claims, etc. The full text of a sample clause is reproduced in appendix c at 710. The added value of contract wording specialists by larry p. The vagaries of the reinsurance market, be it soft or hard, sometimes dictates whether the sole judge clause will appear in a reinsurance agreement. General terms of business agreement for our reinsurance. Reinsurance contract wording revisited expert commentary.
For the duration of the contract, the reinsurer agrees to cover all or a portion of the risks that may be incurred by the insurance company being covered. Reinsurance contract wording by robert w strain, 9780939727483, available at book depository with free delivery worldwide. Nonetheless, a certain rationale for placing the decision within the reinsureds hands does exist. The guy carpenter broker will verify that the necessary wording and documents are in place in relation to the reinsurance placement, the trustees and any statespecific mandates. This stepbystep inhouse programme is a guide to the world of reinsurance wordings for lawyers and executives who are new to the industry or would like to refresh their knowledge and skills. He also provides advice on coverage, insolvency and contract wording issues for a wide variety of insurance and reinsurance relationships, as well as insurance and reinsurance advice in conjunction with corporate transactions. Mar 25, 2020 reinsurance, also known as insurance for insurers or stoploss insurance, is the practice of insurers transferring portions of risk portfolios to other parties by some form of agreement to reduce. Facultative reinsurance is purchased by a primary insurer to cover a single risk or a block of risks held in the primary insurers book of business. Reinsurance treaty unlike a facultative policy, a treaty type of coverage is in effect for a specified period of time, rather than on a per risk, or contract basis.
Reinsurance that transfers to the reinsurer liability for an entire type of insurance, territory, or book of business after the primary insurer has issued the policies. Apr 27, 2015 the added value of contract wording specialists by larry p. Open library is an open, editable library catalog, building towards a web page for every book ever published. A stepbystep inhouse introduction to the world of reinsurance wordings for executives and lawyers who are new to the industry or would like to refresh their knowledge and skills. Included is an intensive study of loss reserving, reinsurance audits, statutory accounting, financial analysis, reinsurance program design and reinsurance contract wording and pricing. One purpose of these clauses was to permit cedents to aggressively handle claims without worrying about their reinsurance. Larry schiffer practices in the areas of complex commercial, insurance and reinsurance litigation, arbitration and mediation. Indeed, this wording is at times difficult to secure in practice. Funding agreement means a contract meeting the definition and requirements of a funding agreement under section 38. General terms of business agreement for our reinsurance clients. Association brma was founded i n 1986 and published the contract wording reference book, which was last updated and modified in 2017. The book provides a comparative englishus law study of the operation of.
The trouble with that sage advice is that sometimes the contract is not as clear as it could be. The insolvency wording and related contract considerations pacicc. Reinsurance association of america raa the art of designing. Golding, law and practice of reinsurance 41 5th ed. It is more apparent that a contract is only an advantage if it exactly re. Strain is the author of reinsurance contract wording 4. Although the wording of the clause may vary, it normally provides for the appointment of.
Founded in 1986, brma is a networking forum for treaty property and casualty treaty reinsurance professionals. Reinsurance contract wording revisited always read the contract at least that is what the experts say and best practices advice. Kramer, the nature of reinsurance, in reinsurance 12 r. Lack of precision in reinsurance contract wording has been known to engender anomalous results. The hardcover of the reinsurance contract wording by robert w. The endpapers and all text pages are clean and unmarked. This barcode number lets you verify that youre getting exactly the right version or edition of a book. From contract certainty to legal certainty for reinsurance. Nov 16, 2016 lack of precision in reinsurance contract wording has been known to engender anomalous results. Today we are going to talk about reinsurance contract wording. Often a single word or phrase can cause a court or arbitrator to construe an agreement in ways unintended. Students will gain an enhanced understanding of reinsurance terms and pricing, reinsurance treaties, and facultative certificates.
The added value of contract wording specialists insurance. The membership consists of several of the foremost reinsurance organizations in the united states and bermuda that continually work to find ways to. The reinsurance contract is a complex agreement consisting of many clauses. Backtobasics workshop reinsurance contract wordings and. Reinsurance contract wording revisited always read the contractat least that is what the experts say and best practices advice. T he reinsurance contract wording course is dominantly constructed to give a brief idea about each clause their importance and specific purpose in the contract. Schiffer on april 27, 2015 posted in contract interpretation, reinsurance contracts as you can tell from many of my blog posts, and certainly from my commentaries on reinsurance, negotiating a clear and unambiguous contract wording is a big part of dispute avoidance. Endorsements, in reinsurance contract wording 582, 58695 robert w. Textblock edges are unblemished except for a small ink spot mark to the top textblock edge. Claims cooperation clause a clause found in many reinsurance contracts that stipulates that the ceding company agrees to consult and cooperate with the reinsurer on claims handling and settlement. Policies reinsured in force at the inception of this contract, including policies. A contract of reinsurance between a policyissuing insurer and a reinsurer that concerns or is.
In the absence of an express choice the position is more complicated. Claimsmade basis the provision in a contract of insurance or reinsurance that coverage. Reinsurance, also known as insurance for insurers or stoploss insurance, is the practice of insurers transferring portions of risk portfolios to other parties by some form of agreement to reduce. Funds withheld means the amount retained by gelaac from reinsurance premiums payable to reinsurer, in accordance with the terms of article v.
The book starts with an introduction to the reinsurance contract that is easily understood and ensures all readers understand the basics of reinsurance. This resource has become the encyclopedic benchmark for treaty reinsurance contract language. Reinsurance environment, contract wording, and excess. The reinsurer who sets the terms premium and contract conditions for the reinsurance contract is called the lead reinsurer. Backtobasics workshop reinsurance contract wordings and disputes. Structuring a reinsurance program gives the broker a. Reinsurance agreement this reinsurance agreement this agreement, is dated as of september 30, 2008 the closing date, by and between financial guaranty insurance company, a new york domiciled insurance corporation the company and mbia insurance corporation, a new york insurance corporation the reinsurer. Guy carpenter explains collateralized reinsurance transactions. The reinsurer or its designated representatives shall have access to the books.
Here too, brma members have helped clarify differences in treaty contracts by compiling and publishing a definitive, contract wording reference book. And three, some clauses used in excess liability coverage. Other reinsurance purpose to ensure the accurate application of the reinsurance contracts coverage inuring coverages what reduces the loss flowing through the contract specifies the underlying coverages standalone articleadditional paragraph in the retention and limit article. All premium payment terms must be met on time or your reinsurers may have the right to effect a notice of cancellation for nonpayment of premium. The form and wording of reinsurance contracts are not as closely regulated as are insurance contracts, and there is no rate regulation of reinsurance between private companies. Reinsurance contract wording july 1998 edition open library. Policies entered into on or after 17 december 2009 covering large risks, will usually be governed by the law of the country where the insurer has its habitual residence. Jun 25, 2019 facultative reinsurance is purchased by a primary insurer to cover a single risk or a block of risks held in the primary insurers book of business. What a difference a word makes insurance and reinsurance. The book then moves into various applications of treaty and facultative reinsurance and the various applications. Reinsurance contract wording revisitedlack of clarity may cause ambiguities to rise. A reinsurance contract is often a manuscript contract setting forth the unique agreement between the two parties.
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