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Chapter 6 Reinsurance programmes 6/21

C3 Contractual placing documentation
By way of introduction to the next chapter, we complete the placement of the programme by describing
the process and introducing the Market Reform Contract (MRC) and the Contract Certainty Code of
Practice.

C3A Acceptance of the risk
If, having received a fair presentation of the risk, the reinsurer is minded to accept that risk and the
reinsurer enters the amount or percentage of the risk that it is prepared to accept on the contract
document, usually described as the slip, and adds its stamp, initial and the date.
A reinsurer’s liability will only attach from that point although it is not uncommon for reinsurers of
certain classes of reinsurance to back-date the start of their liability, providing that they are satisfied
with the circumstances prevailing on that particular risk.
Consider this…
Consider how such a willingness to back-date cover would require a great degree of trust to exist between the
reinsurer and the reinsured.

Once the underwriter has committed itself to a participation in a reinsurance by ‘writing a line’ on a slip,
Slip provides
the slip provides evidence of a contract of reinsurance. evidence of contract
of reinsurance
In the London Market, the use of a standard form of contract document, incorporating the full terms and
conditions has and this document, the MRC (see section C3B), has become the evidence of cover and, in
effect, replaces the slip and any subsequent contract wording. All London broker placements are made
on this basis unless the reinsured requests otherwise.
In a subscription market, business is offered to and accepted by a number of separate and totally
independent risk-bearing organisations. This can be best seen in the way that the London reinsurance
market operates.

Reinforce Reference copy for CII Face to Face Training Chapter
While we are referring here to ‘subscription’ market business, markets can also be ‘vertical’. Be sure you can 6
recognise the differences between the two.

Here, each entity, whether it is a Lloyd’s syndicate or a reinsurance company, decides either to decline
or accept proportions of risks offered by clients. Risk continues to be offered until the total amount of
insurance or reinsurance required by the client has been placed or the maximum amount of the risk that
the market is prepared to accept has been achieved.

C3B Market Reform Contract
According to the Open Market MRC standard, the MRC should be used for:
• all firm quote and firm order open market insurance and reinsurance business placed by London
Market brokers;
• all marine open cargo covers and declarations attaching to them. Marine open cargo covers are
defined as those risks where the insured has, or is expected to acquire, an insurable interest in each
declaration bound;
• declarations or off-slips attaching to line slips; and
• declarations off limited binding authority agreements, where appropriate.
Coverholders are firms that can be established anywhere in the world who are authorised by Lloyd’s
syndicates and sometimes by company underwriters to enter into contracts of reinsurance and issue
documentation on their behalf.