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Chapter 7 Contract wordings 7/15

B4 Miscellaneous clauses
In this section, we will review some of the more important miscellaneous clauses that you might
encounter.
B4A Access to records clause

This clause (also known as the right of inspection clause) gives the reinsurer the (express) right to
Right to examine or
examine or inspect the reinsured’s books and records, pertaining to the reinsurance contract. The inspect the
reinsurer may wish, at its own cost, to satisfy itself that the treaty is being handled properly, for reinsured’s books and
records
example, that premiums are being ceded correctly or that the claims reserves are adequate.
Typically, the right to inspect is exercised by the reinsurer when it perceives a problem that cannot be
resolved by normal enquiries, and can be expensive, particularly if outside experts are employed. The
right to inspect lasts as long as either party has a claim against the other, and may continue long after
the original period of the agreement. It will also survive termination, again provided that one party has a
claim against the other.
An example of this clause is as follows:

For as long as either party remains under any liability hereunder the Reinsured shall, upon request by the
Reinsurer, make available at the Reinsured’s head office or wherever the same may be located, for
inspection at any reasonable time by such representatives as may be authorised by the Reinsurer for that
purpose, all information relating to business reinsured hereunder in the Reinsured’s possession or under
its control and the said representatives may arrange for copies to be made at the Reinsurer’s expense of
any of the records containing such information as they may require.

The clause may require reinsurers to enter into a confidentiality agreement prior to inspecting the books
and records.

B4B Underwriting policy clause
This clause requires a reinsured to seek a reinsurer’s approval to significant change in its underwriting Reference copy for CII Face to Face Training
policy. The purpose of this clause is to prevent the reinsured eroding or otherwise changing the nature of
the original bargain struck between the parties.

A typical clause is as follows:
It is a condition precedent to the reinsurer’s liability hereunder that the reinsured shall not introduce at any Chapter
time after the reinsured enters into this Agreement any change in its established acceptance and
underwriting policy which may increase or extend the liability or exposure of the reinsurer hereunder in 7
respect of the classes of business to which this Agreement applies without the prior written approval of the
reinsurer.

B4C Errors and omissions clause
This clause seeks to ensure that any inadvertent errors, omissions or delay in complying with the terms
and conditions of the treaty are remedied immediately upon discovery and without any impact to the
treaty beyond that of ordinary rectification.
Originally, the clause was incorporated into proportional reinsurances to address mistakes made in
supplying information to reinsurers about the risks ceded to such treaties.
Later, the scope of the wording was extended to cover the keeping of records of cessions to the treaty,
Commonplace in non-
and to the provision of periodic bordereaux. It is now commonplace in non-proportional reinsurances proportional
where it is used to ensure that a claim is not declined because of an inadvertent error on the part of the reinsurances
reinsured.

A simple example of this clause is as follows:
Such error or omission shall be rectified immediately upon discovery, and shall not impose any greater
liability on the Reinsurers than would have attached if the error or omission had not occurred.