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In which case, they become binding and are payable on receipt of reasonable evidence of the loss
settlement having been made by the reinsured. Additionally, clauses may incorporate a period within
which reinsurers should make payment. Unlike proportional reinsurance treaties, where claims are
recovered on a balance of account basis within the periodical accounts, claims under non-proportional
treaties are recovered individually.
Be aware
A simpler clause may also refer to ex gratia (as a favour) payments. By definition, such payments are outside the
terms of the original policies; however the parties may agree to write them back in so take care.

D6C Claims handling clauses
These clauses reserve reinsurers’ rights of involvement in the management and/or determination of the
original claim. They may be imposed in circumstances where the reinsurer’s exposure to the loss, and/or
experience in handling particular types of loss, is far greater than that of the reinsured. If a reinsured is
not well known to the reinsurer, the latter may wish to take control of a claim. The strength of the
relationship between the parties is a key determinant when negotiating these provisions even if, in
practice, a claims cooperation clause is more often than not inserted.

An example of a claims cooperation clause follows:
Notwithstanding anything to the contrary contained in this Contract it is a condition precedent to
reinsurer’s liability under this Contract that:

1. The Reinsured shall give to the Reinsurer written notice as soon as reasonably practicable of any
claim made against the Reinsured in respect of the business reinsured hereby or of its being notified
of any circumstances which could give rise to such a claim.
2. The Reinsured shall furnish the Reinsurer with all information known to the Reinsured in respect of
claims or possible claims notified in accordance with (1) above and shall thereafter keep the
Reinsurer fully informed as regards all developments relating thereto as soon as reasonably
practicable.
3. The Reinsured shall cooperate with the Reinsurer and any other person or persons designated by the Reference copy for CII Face to Face Training
Reinsurer in the investigation, adjustment and settlement of such claim notified to the Reinsurer as
aforesaid.

With the addition of the following paragraph, the clause becomes a claims control clause:
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Chapter 4. The Reinsurer shall have the right at any time to appoint adjusters and/or representatives to act on
their behalf to control all investigations, adjustments and settlements in connection with any claim
notified to the Reinsurer as aforesaid.

In practice, these provisions can be a source of frustration for the parties and give rise to a number of
problems. For example, the absence of timely notice by the reinsured where the parties have agreed to
cooperate may lead to claim handling decisions being taken with which the reinsurer would have
disagreed. On the other hand, delayed decision making by the reinsurer may have an adverse impact on
the key insurer–insured relationship, leading to unnecessary friction between the two and a less than
optimal experience at a difficult time for the insured.
It is important to recognise the obvious conflict between loss settlement clauses on the one hand, and
claims cooperation (and control) clauses on the other. While the former trust reinsureds to make
settlements, the latter typically do not, providing for a certain level of involvement by reinsurers in that
settlement process.

D7 Interlocking clause
The interlocking clause appears in RAD (policies issued) treaties. If an occurrence or event impacts risks
Clause appears in
RAD (policies issued) which attach to different treaties, the reinsured may have to run more than one retention and the
treaties reinsurer pay more than one limit of liability for the same occurrence or event, depending on the total
amount of the original losses. The purpose of this clause is to distribute those losses between the
involved (or interlocked) years.