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C4 Accounting clause
This clause requires the reinsured to prepare and despatch periodic accounts to the reinsurer. It states
States when accounts
have to be presented when accounts have to be presented to the reinsurer, what details have to be included in the accounts
to the reinsurer and when money should be rendered to the reinsurer in respect of those accounts, or vice versa. They
include the following:
• the accounting period, i.e. quarterly, monthly, half-yearly;
• how close to the end of the relevant period the account has to be rendered;
• how and when the account is to be confirmed and the balances settled, i.e within 90 days;
• any special class of provisions, such as the rendering of separate accounts for specified currencies.

C5 Premium clauses

C5A Premium clause

This clause states that cessions to the treaty are subject to the same terms and conditions as those of
the original business, and provides that the reinsured will pay the reinsurer its proportionate share of
the original gross (or net) premiums received by the reinsured on that business. If the reinsurer agrees to
receive its proportionate share of original net premiums, the clause should set out the permissible
deductions from the original gross premiums.
C5B Commission clause

This clause sets out how much commission is to be paid by the reinsurer to the reinsured and when it is
to be paid. There are two basic types of commission: ceding commission and profit commission.

Reinforce
Refer back to chapter 4, section C, and remind yourself of the types of commission.

C6 Claims clauses Reference copy for CII Face to Face Training

These clauses deal with the notification and settlement of all losses to the treaty.
C6A Claims information
7 The treaty should set out, in the required level of detail, the extent of individual and/or summary loss
Chapter information to be provided to the reinsurer, and when it should be provided.

One reinsurer may require quarterly loss bordereaux plus full particulars of claims in excess of a certain
amount. For example, the reinsurer may have outwards reinsurance available for such losses. On the
other hand, another reinsurer may, perhaps where there is a high level of trust between the parties,
dispense with bordereaux entirely and rely on the access to records clause should the need arise.
The level of loss information is often a function of the strength of the relationship between the parties. In
Treaty may contain a
claims notification, any event, the reinsurer will usually require not less than summary information on a quarterly basis to
cooperation or control maintain appropriate reserves in its own books. The treaty may contain a claims notification,
clause
cooperation or control clause; each such clause requiring the reinsured to provide claims information.

C6B Claims (or loss) settlement clause
The treaty should also set out the basis on which the reinsurer is to settle claims.

An example clause where the overarching intention of the agreement is to ‘follow the fortunes’ is set out below:
The Reinsurers agree to be bound by the terms and conditions of the Policies protected hereunder and the
Reinsured has the sole right to settle losses and all settlements including payments on account and
compromise payments shall be binding on the Reinsurer. The Reinsured shall consult the leading Reinsurer
only prior to any ex gratia settlement.
The Reinsured may institute any action they think fit in relation to any claim and the Reinsurers shall be
liable for their share of the claim including all expenses incurred in connection therewith other than the
salaries of employees and office expenses of the Reinsured. The Reinsurers shall participate in all salvages
and recoveries obtained by the Reinsured in respect of any losses in which the Reinsurers are interested.