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6/22 M97/February 2018 Reinsurance

The MRC is in six sections, as follows.
The MRC is in six
sections
Table 6.1: Market Reform Contract (MRC)
Risk details Details of the risk/contract involved, such as the insured, type, interest, coverage,
conditions, subjectives, jurisdiction and premium.

Information Free text additional information is used to detail or, more typically, reference the
information provided to (re)insurers to support the assessment of the risk at the time of
placement.
Security details Includes reinsurers’ liability (for reinsurances), order hereon, basis of written lines,
basis of signed lines, signing provisions, and insurers’ or reinsurers’ ‘stamp’ details
(which indicate each insurer’s share of the risk and their references).
Subscription agreement This section documents all of the inter- and intra-market arrangements to operate
between the subscribers to the risk in relation to the agreement of contract changes,
claims, the collection of expert fees, the payment of premium and the use of third-party
service providers.
Fiscal and regulatory Includes details of fiscal and regulatory issues specific to the placement of the risk.
Broker remuneration and Information relating to brokerage, fees and deductions from the premium.
deductions

There are also a number of guidelines so that its use is consistent with the principles of contract
certainty and the Contract Certainty Code of Practice. They are as follows:
• Any monetary amounts should be clear as to the applicable currency. To avoid doubt, symbols such as
£ or $ should not be used. Instead the relevant three-letter ISO currency code should be used, such as
GBP for British pounds sterling and USD for United States dollars.
• The contract should not contain any acronyms or other terms which are ambiguous or non-specific, in
particular, terms such as ‘TBA’ – to be agreed or to be advised.
6 • All contract terms should be clearly stated. Any standard registered wordings or clauses should be
Chapter referenced or attached, and all bespoke and non-standard wordings and clauses must be attached Reference copy for CII Face to Face Training
in full.

Be aware
When we refer to a ‘bespoke’ wording, we mean a form of words that has been designed to a one-off specification
that is not in widespread use and, therefore, not universally recognised.

• Any subjectivities stated in the contract must be expressed as unambiguous conditions.
• Standard contract provisions must be relevant to the risk or the administration of that risk.
• Signing provisions should be used where there is more than one participating reinsurer so that
certainty of the signed lines is achieved by inception or by the time the contract is finalised.
• All of the requirements specified in the Contract Certainty Code of Practice should be met.

C3C Contract certainty
Until relatively recently, it had long been a feature of the London subscription market that when a
contract of (re)insurance came into effect, its terms and conditions remained uncertain. In other words, it
could not be said that, at the inception of the contract, complete and final agreement on all terms had
been achieved by the parties.
In response to the Financial Services Authority’s challenge to end this ‘deal now detail later’ culture, the
Code represents a
common approach for Market Reform Group (now known as the London Market Group) issued a Contract Certainty Code of
the whole UK Practice – Principles and Guidance in 2005 (last updated in October 2012). The Code represents a
insurance industry
common approach for the whole UK insurance industry and is stated to apply to general insurance
contracts either entered into by a UK-regulated insurer, or arranged through a UK-regulated broker (that
is, slip and non-slip business). That said, its status remains as industry guidance and it is not intended
to be binding on any party.