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Chapter 7 Contract wordings 7/17

B4F Offset clause
This clause allows the parties to offset any balance or amount due from one party to the other under a
particular reinsurance contract or any others between the parties, whether acting as reinsurer or
reinsured.

B4G Co-reinsurance clause
This clause states the proportion (or percentage) of the particular contract that the reinsured agrees to
retain ‘net and unreinsured’. The purpose of the clause is to ensure that the reinsured remains
interested in economic claim settlement.
In proportional reinsurance, it is more usually described as co-participation rather than co-reinsurance.
In non-proportional reinsurance, a reinsured assumes an amount or percentage of the reinsurance cover
(or layer), in addition to the deductible.

B4H Net retained lines

This clause states that the contract applies only to the amount of loss retained by the reinsured for its
own account after relevant deductions.
Typically, the clause is in two parts. The first part of the clause states that this reinsurance contract only
Clause is in two parts
applies to that part of an underlying loss which the reinsured retains net for its own account. In other
words, any other reinsurances protecting the same loss must be taken into account before applying the
terms of this contract. This requirement is logical, otherwise the reinsured could potentially recover the
same loss from more than one reinsurance policy (although, any attempt to do so would probably fall
foul of local law).
The clause also recognises that the reinsured and reinsurer may specifically agree that the reinsured
may purchase additional reinsurance to reduce the amount it retains for its own account after the
application of this reinsurance contract. In other words, it may protect its retention under this contract.
The second part of the clause bars a reinsured from seeking to collect under this particular contract any
amounts which had been reinsured elsewhere but for whatever reason remain unpaid by those Reference copy for CII Face to Face Training
reinsurers. In other words, if another reinsurer is unable or unwilling to pay its share of a claim, the
reinsured cannot increase its UNL by the uncollected amount in order to recover from a contract with a
net retained lines clause.

Example:
1. This Agreement applies only to that part of any insurance or reinsurance which the Reinsured retains Chapter
net for its own account and/or that portion of any insurance or reinsurance which the Reinsured 7
cedes to its Quota Share Reinsurers and in calculating the amount of any loss hereunder and also in
computing the amount in excess of which this Agreement attaches only sums payable in respect of
that portion of any insurance or reinsurance which the Reinsured retains net for its own account and/
or that portion of any insurance or reinsurance which the Reinsured cedes to its Quota Share
Reinsurers shall be included.
2. The amount of the Reinsurers’ liability hereunder in respect of any loss or losses shall not be
increased by reason of the inability of the Reinsured to collect from any other reinsurers (whether
specific or general) any amounts which may have become due from them whether such inability
arises from the insolvency of such other reinsurers or otherwise.

B5 Boilerplate clauses
These are standard clauses with little reinsurance content to them. They are, however, essential to
Essential to making
making the contract work and to providing the parties with the appropriate protections in the event of a the contract work
dispute. More information is given in table 7.2.