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Table 7.3: Accident circle occupational disease (ACOD) clauses
ACOD/A Any one claim by any one employee is considered one event.
ACOD/B Any one claim by any one employee is considered one event and,
• if original liability is established on an exposure basis, the claim paid by any one period of
reinsurance is reduced in proportion to total length of exposure, and the retention and cover
reduced in proportion to the reinsured’s period of exposure to all years;
• if legal liability is not established on an exposure basis, the date of loss occurrence is
deemed to be the date the legal liability was established.

ACOD/C In relation to covers on a ‘claims made’ basis, any one claim by any one employee is
considered one event (as ACOD/A), however the date of the loss occurrence is deemed to be
the date the original insured is advised of claim following diagnosis.

A copy of these clauses has been reproduced in appendix 7.5 on RevisionMate.

Example 7.1
Employee, John Smith was awarded £1m having developed an occupational disease following exposure to a
particular occupational hazard for the 45-month period between 1 July 2015 and 31 March 2019. For the first 18
months of that period, John Smith worked for a single employer and the original insurer purchased reinsurance cover
in excess of £100,000 for each calendar year which incorporated ACOD/B. How much is recoverable from
reinsurers?

Treaty year Treaty year as a Proportion of Pro-rated Amount of pro- Amount
proportion of claim to each retention rated retention recoverable
total period of treaty period
exposure

2015 6/45 133,333 6/18 33,333 100,000
2016 12/45 266,667 12/18 66,667 200,000

D10H Change in law clause Reference copy for CII Face to Face Training

This clause is designed to protect the reinsurers’ bargain with the reinsured from a change in the law
after the commencement of the treaty. If the change is considered to significantly increase reinsurers’
7 liability, the parties agree to work to revise the terms and conditions of the treaty. However, if that
Chapter Clause is common in The clause is common in casualty excess of loss treaties where, for example, benefits to injured workers
process fails, cover continues as if the law had not changed.

casualty excess of
loss treaties may be altered by legislation with retroactive effect.
A typical example is set out below:
In the event of any change in the law, whether arising from legislation, decisions of the courts or
otherwise, at any time after the Reinsurer has entered into this Agreement by which the Reinsurer’s liability
hereunder is materially increased or extended the parties hereto agree to take up for immediate discussion
at the request of either party a suitable revision in the terms of this Agreement. Failing agreement on such
revision within thirty days after such a request it is agreed that the Reinsurer’s liability hereunder
whensoever arising shall be determined as if the said change in law had not taken place.

Activity
See chapter 11, section B4B to find out about the new personal injury discount rate. Consider the immediate impact
of its implementation on a reinsurer’s approach to reserving for personal injury claims in the context of a non-
proportional treaty containing the example clause set out above.

D10I Loss corridor clause
This clause describes an additional amount retained by the reinsured, usually on the working layer of a
casualty treaty. Under the terms of this clause, the reinsured agrees to retain an additional ‘corridor’ of
losses with reinsurers providing cover outside (say, above and below) that corridor.