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In the context of general liability treaties in the UK, the standard war and terrorism clause is usually
caveated to the extent that it is necessary to comply with the Road Traffic Acts and/or the law relating to
the compulsory insurance of liability to employees. Here, ‘terrorism’ is invariably expressed to follow the
interpretation given to it in the Terrorism Act 2000.

E4 Reinsurance assumed clause
This clause excludes liability arising out of any reinsurance business written (or assumed) by the
reinsured.
Consider this…
Why would reinsurers desire this?

The purpose of this clause is to reduce a reinsurer’s exposure to retrocession contracts, in particular,
their tendency to aggregate single event risk at low premium. The clause has many forms and, of course,
will be absent in contracts intended to provide retrocessional cover. At its simplest, the reinsurance
contract may exclude ‘all treaty business’. Alternatively, it may exclude ‘all reinsurance assumed other
than facultative, intra-company reinsurance among many of the companies controlled by or affiliated
with the Company, or reinsurance of policies underwritten by the Company’.

Be aware
In marine reinsurance, it is common for a whole account protection to write back business written on a ‘facultative,
reporting or named account basis’. Similar provisions appear in aviation reinsurance contracts.

E5 Insolvency fund exclusion clause

This clause excludes liability arising from the reinsured’s involvement in any insolvency fund. In the USA,
Clause excludes
liability arising from an insolvency fund is often established by statute to handle the run-off of an insolvent insurer. Typically,
the reinsured’s it is a non-profit unincorporated legal entity backed by all other insurers licensed to transact insurance
involvement in any
insolvency fund business in the particular state. The fund’s obligations and expenses are ‘assessed’ to those insurers. Reference copy for CII Face to Face Training

E6 Information technology hazards clarification clause
This clause excludes losses flowing from damage to, or failure of, a computer system unless arising from
7 a specified peril, and resulted from the perceived Y2K threat to computer systems using two-digit codes
Chapter endorsements.
for identifying the year. Similar provisions are entitled ‘electronic date recognition’ exclusions or

A per catastrophe/event reinsurance would bar aggregation of such losses save where caused by a
specified peril and, in the marine market, the JELC information technology hazards clause XL 2001/003
is in use for this purpose.
By contrast, in the aviation market, the ‘aviation date recognition (reinsurance) clause’ (LSW 1036)
confirms coverage for an aircraft accident caused by the failure of any equipment to function safely or
correctly following any real or simulated change of date, without which no aircraft would be able to fly.

E7 Other

Other general exclusion clauses include:
• pools, associations and syndicates exclusion clause;
• cyber attack exclusion clause/electronic data endorsement; and
• a sanction exclusion clause provides that the reinsurer has no liability to provide coverage, or to pay
claims, to the extent that to do so would be in violation of any political, economic or trading sanctions
or penalties.

An example of a sanction exclusion clause (LMA 3100) is set out below:
No Reinsurer shall be deemed to provide cover and no Reinsurer shall be liable to pay any claim or provide
any benefit hereunder to the extent that the provision of such cover, payment of such claim or provision of
such benefit would expose that Reinsurer to any sanction, prohibition or restriction under United Nations
resolutions or the trade or economic sanctions, laws or regulations of the European Union, United
Kingdom or United States of America.