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Chapter 11 Casualty reinsurance 11/25

As far as eligibility for cover is concerned, the diversity of medical institutions, from single-doctor
practices to university hospitals, and the broad spectrum of activities and responsibilities of a physician,
from general practitioner to senior physician in gynaecology and obstetrics, all have to be taken into
account.
However, compared to other professional liability covers, the scope of cover and conditions can only be
The scope of cover
influenced to a limited extent. This is because when granting insurance cover for losses relating to the and conditions can
exercise of medical activities, there is usually no scope for a large number of special exclusions. The only be influenced to
a limited extent
cover of such risks must, therefore, be subject to a particularly precise assessment of each risk on its
own merits, including both the subjective circumstances of the policyholder and the form of the external,
objective aspects of the risk.
Risks in the field of medicine differ considerably from country to country in relation to both the liability
situation and the situation with regard to the physical and moral hazard. Even the most idealistic
medical workers can find themselves working under unhygienic conditions that threaten patients’
welfare. Cover must allow for this.

I1 Underwriting considerations

Reinsurers should bear in mind the following features when negotiating coverage for this class:
• Depending on market practice, contracts may be written on an occurrence or a claims made basis,
although the claims made principle is typically preferred. For occurrence policies, limitation of the
extended reporting period should be agreed wherever possible. Separate statistics should be kept for
mixed portfolios.

Question 11.7

Why is it likely that reinsurers will prefer to avoid multi-year periods for this type of cover?

• Aggregate limits especially for hospitals are generally considered essential.
• Medical malpractice cover is not usually included in an insurer’s umbrella policies. Reference copy for CII Face to Face Training
• Exclusions usually apply where serial loss exposure exists, as in the case of AIDS or hepatitis.
• Opportunities may exist to include public liability, environmental liability and EL risks for the
institution or practice as additional covers.
As is the case with other lines of PI, this class can be written on both proportional and non-proportional
basis and facultative and excess of loss, although generally excess of loss reinsurance is preferred.

Reinforce
Before you move on, ensure that you understand how reinsurance operates for PI and medical malpractice
insurance.

J Trade credit, surety, political risks, fidelity insurance
and bonds

J1 Trade credit

Trade credit insurance covers the risk of non-payment to a seller by a buyer in respect of sums due
arising out of a trade-related contract for goods or services. While a sole trader may be an insured buyer
in respect of their business debts, trade credit underwriters will not insure payment of personal debts.
Policies are generally written for a policy period of twelve months and specify maximum terms of
Policies are generally
payment. The underwriter may specify limits of exposure on all buyers and include special conditions written for a policy
relating to security required, such as a guarantee from the directors of the buyer’s company. Policy period of twelve
months
conditions may also include a requirement to advise a specified debt collection company within a short
time after a debt becomes overdue for payment. Chapter

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