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Chapter 7 Contract wordings 7/9

A2 Treaty wordings
On one view, there are two basic styles of treaty wording in common use. Firstly, there is what may be
Two basic styles of
described as the full (or complete) wording which details within its body, within the text, all of the treaty wording in
variables peculiar to the parties’ actual agreement. The variables will include: names, period, premium, common use
limit, excess, geographical scope and so on.
Secondly, there is the schedule-based wording which relies on a core wording and a statement of
variables (or schedule). Here, those variables are incorporated into the core wording by individual
reference within the wording from a particular part, or section of the schedule.
An example of a schedule-based wording in widespread use is the Joint Excess Loss Committee (JELC) Refer to appendix
7.1 on RevisionMate
Excess Loss Clauses. These clauses are often used in wordings subscribed to by the marine market, and chapter 12,
although the subject matter is not always marine business. section B
In any event, a treaty wording is typically a long and complex document and, in the next sections, we
A treaty wording is
review the many clauses (usually termed articles) that are current in the London reinsurance market. typically a long and
complex document

B Clauses common to proportional and non-proportional

wordings

In this section, we review the different clauses that are common to proportional and non-proportional
reinsurances. In sections C and D, we shall review those clauses that are specific to each type of
reinsurance. For ease of reference, we consider the clauses common to proportional and non-
proportional treaty wordings under the headings given in table 7.1.

Table 7.1: Clauses common to proportional and non-proportional wordings

Limitation clauses • Period.
• Territorial scope.
• Special termination (or cancellation). Reference copy for CII Face to Face Training
• Special acceptances.
Premium clauses Referred to in section C5 for proportional contracts and in section D2 for non-proportional
and commission contracts.
clauses
Claims clauses Referred to in section C6 for proportional contracts and in section D6 for non-proportional Chapter
contracts.
Payment clauses • Currency clauses. 7
• Late payments.
• Loss reserves.
Law and dispute • Law and jurisdiction.
resolution clauses • Dispute resolution.

Miscellaneous • Access to records (alternatively, inspection of records).
clauses • Underwriting policy.
• Errors and omissions.
• Extra contractual obligations (ECO) and excess of policy limits (XPL).
• Insolvency.
• Offset.
• Co-reinsurance.
• Net retained lines.
Boiler plate clauses • Notice.
• Intermediary.
• Termination of intermediary.
• Confidentiality.
• Amendments and alterations.
• Severability.
• Entire agreement.
• Non-waiver.
• Several liability.