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12 12/8 M97/February 2018 Reinsurance
Chapter

The possibility of the value of a cargo or commodity increasing during a voyage due to changes in market
trading conditions, should also be taken into account, especially with regard to the setting of the treaty
limits that will be needed by the insurer.
Accumulations
Particular difficulties occur in accumulation control, especially in the case of cargo insurances where the
Particular difficulties
occur in accumulation name of the carrying vessels may be unknown or only known after the completion of the voyage. The
control possibility of foreseen, known or unforeseeable accumulations, of cargoes insured under different
policies or different cargoes covered by the same policy and transported by one sole vessel, constituting
one sole risk, for the reinsurer as well as for the insurer’s retention, should not be forgotten.
Suitable types of reinsurance
Quota share and surplus combinations are frequently used for cargo reinsurance. Cargo accumulation
control, not only in ports but also on vessels or other means of transport, poses serious problems. Above
all, subsequent adjustments to take into account different consignments of merchandise on the same
vessel are very laborious, since in the case of a surplus treaty, the corresponding cession may have to be
recalculated.
Where non-proportional reinsurance is to be used, the necessary factors and information that influence
the negotiation of marine excess of loss reinsurances are the same as those set out in the previous
chapters. However, due to the potential variety of individual risks, other specific information should be
available.
The majority of these covers are established on a per event basis. Care must be taken to ensure that the
definition of what constitutes ‘one event’ is clearly understood by the parties to the reinsurance and is
defined in the treaty wording.
With cargo risks in particular, the definition of what constitutes one vessel must be clear as disputes can
easily arise where barges, lighters or other craft are used in the loading or unloading.
Reinforce
Before you move on, check your understanding of the different underwriting considerations for hull and cargo
reinsurance. Reference copy for CII Face to Face Training

A3 Energy
The peak values of offshore production platforms represent the greatest single unit value at risk in the
Peak values of
offshore production marine underwriting market. It is, therefore, essential that the whole of the world’s reinsurance market is
platforms represent activated in one way or another to provide the capacity to reinsure the enormous risks being written by
the greatest single
unit value at risk the direct market. Not only must the huge values of the units themselves be considered; it must be
borne in mind that further cover is usually required for such risks as the costs associated with pollution
control.
Much energy business is placed in the market by way of a package, which may include the hulls, cargo,
liabilities and other properties on shore. As a result of packaging of all the classes, there is considerable
demand for retrocession protection from those reinsurers who wish to reduce or eliminate their
commitment on one or more parts of the package. If retrocession protection is limited reinsurers seek to
reduce their involvement to potentially high exposures.
Refer to section B2 After the soft market conditions of the late 1990s had more or less prevented the attainment of any
and appendix 7.1 on
RevisionMate onshore limits, the refinery exclusion clause was conceived for the purpose of excluding onshore risks
from the transit and marine insurance market.