Page 192 - M97TB9_2018-19_[low-res]_F2F_Neat2

7/30 M97/February 2018 Reinsurance

Refer to Similarly, the claims series clause is used in relation to products’ liability business, enabling all claims
section D10C for
claims series clause from a specific cause which involve one original insured to be aggregated for the purposes of recovery
under a casualty excess of loss treaty.
‘Each and every loss each and every risk’ – property (per) risk excess of loss
Here, the reinsured is typically the sole judge of what constitutes ‘each and every risk’ subject to certain
constraints. Examples of these constraints are set out below:
• ‘In no event shall a building and its contents be considered more than one risk.’
• ‘Any one risk’ shall mean all insurance written under one or more policies covered hereon for all
insureds each and every four-wall area. A four-walled area means any:
– building or other structure,
– series of interconnected buildings or other structures, or group of buildings or other structures, and
any associated property.
• ‘Risk’ shall be considered in accordance with the way the business is protected.
• Hereunder was written and accepted by the reinsured.
• ‘All values at any one location’. Location means a building or structure, or group of buildings and/or
structures, found on one site; a site being identified by its ‘complex’ or ‘site’ address.
In the extreme, each definition needs to be able to cope with the multitude of interests to which an
insurer may be exposed in, for example, blocks of flats, industrial estates, rows of terraced houses and
large office complexes, such as Minster Court in London or, previously, the World Trade Center in
New York.
A catastrophe excess of loss reinsurance will contain a two risk warranty; that is, at least two risks must
Contain a two risk
warranty have been involved in the loss occurrence. Otherwise, the reinsurance is potentially exposed to losses to
large risks. You should also note that, for obvious reasons, a contract will usually limit its exposure to
risks arising from a single catastrophe by imposing an ‘any one occurrence’ limit.

‘Each loss’ – marine excess of loss
The JELC Excess of Loss clauses provide that ‘loss’ means loss, damage, liability or expense thereof
arising from one event. Other examples include: Reference copy for CII Face to Face Training
• ‘In the aggregate each annual period’ – stop loss (or aggregate excess of loss).
• ‘Each and every loss each policy and/or section and/or insured’ – casualty excess of loss.
• ‘Any one insured and/or policy and/or interest’ – (marine or aviation) cargo excess of loss.
7 • ‘Any one vessel’ – (marine) hull excess of loss.
Chapter D5 Reinstatement clause

Refer to chapter 5, The reinstatement clause limits the amount of cover available under the contract by specifying the
section E for
detailed review of number of times the limit of indemnity or any portion of it may be automatically reinstated after loss,
clause that is, the number of reinstatements. Absent such a condition, there is no limit.

The clause must also specify whether the reinstatements are free or paid, and if paid, how the
reinstatement (or additional) premiums payable by the reinsured to the reinsurer are to be calculated.
Such premiums are paid simultaneously with the claim. It is not unusual for UK motor and liability
treaties to have unlimited free reinstatements. They are, however, strictly limited in the case of per risk
(usually free) and per catastrophe excess of loss treaties.
An example clause for a scheduled contract follows:

In the event of the whole or any portion of the indemnity given hereunder being exhausted the amount so
exhausted shall be automatically reinstated from the time of commencement of the appropriate loss period
subject to payment of a pro rata as to time and amount additional premium calculated on the premium due
hereunder.
If the loss settlement is made prior to the adjustment of premium the reinstatement premium shall be
calculated provisionally on the deposit premium subject to adjustment when the reinsurance premium
hereon is finally established.

Nevertheless, the Reinsurer shall never be liable to pay more than the limit of indemnity as set out in the
schedule in respect of any loss occurrence nor more than the amount set out in the schedule in all in
respect of the period of this agreement representing the number of reinstatement(s) of the limit of
indemnity set out in the schedule.