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Chapter 12 Marine and aviation reinsurance 12/13 Chapter

Similarly, there is a blanket exclusion for war and civil war risks, although the clause enables cover to be 12
Blanket exclusion
readily given, provided it is on standard forms. for war and civil
war risks
As regards terrorism risks, following 9/11, the reinsurance market was forced to reassess various
scenarios underlying the scope of cover provided to reinsureds with regard to MPL exposures. One of the
outcomes was this exclusion, and the additional clause to write-back certain risks, for example, hull
risks, port installations, offshore installations and pipelines, and cargo in the ordinary course of transit.
The standard clause ends with the statement ‘if any reinsurer asserts that any loss, damage, liability or
expense is not covered by reason of this clause it shall be for the reinsured to prove to the contrary’,
reversing the usual burden of proof.
For greater clarity and transparency, one party, often the reinsured, will include a statement (or letter) of
understanding in the contract wording. Typically, this statement sets out, in some detail, the reinsured’s
understanding of the terrorism coverage afforded by the combination of these clauses, making it difficult
for reinsurers to disagree in the event of a relevant claim. For completeness, the nuclear energy risks
exclusion and the extra-contractual obligations exclusion are also found here.

B2 Additional clauses

These clauses include:
• Aggregate voyage extension (cargo) clause (Additional Clause B): this clause allows a reinsured to
aggregate cargo losses of the same nature and to treat them as one event, provided that: (1) it is not
possible to split out the damage caused by the separate events; and (2) the losses are in respect of
cargo carried on the same vessel for the same or an overlapping voyage.
Recalling the declaration in Axa Re v Field (1996) that an ‘event’ is something which happens at a
particular place, at a particular time and in a particular way, this clause means that the reinsured
avoids the problem of having to prove a particular loss on a particular date in circumstances where, by
reason of the way in which cargo is shipped, loss or damage is only discovered upon arrival at port
and discharge.
• Collusion clause (C): this clause allows a reinsured to aggregate infidelity and fraud losses suffered by
an original insured in certain circumstances and to treat them as one event. Importantly, the original Reference copy for CII Face to Face Training
losses must have not been settled as separate losses on the original policy, and must not originate
from separate original policies. Again, this clause helps to reduce and/or avoid the practical issues
which can flow from the legal definition of an ‘event’.
• Liability exclusion clauses (LEC) A&B (E&F, respectively): LEC A begins with a blanket exclusion of all
liability claims but then reinstates marine and aviation liability claims by specific mention of the cover
provided. Although similar to LEC A, LEC B does not exclude claims arising on ‘claims made’ or ‘losses
discovered’ policies. Further, there is the additional proviso that the original claim must actually be
‘made’ or the loss ‘discovered’ during the period of the original contract. This limits the ‘tail’ of such
risks, meaning that once the expiry date has passed, the reinsurer is off-risk.
• Refinery exclusion clause (G): this clause has been designed to exclude certain non-marine losses
associated with energy risks, and excludes – with certain caveats – all claims which arise from
onshore refineries, petrochemical or chemical plants and installations within their boundaries. It
allows a variety of limited inclusions (for example, jetties, wharves, berths, piers and docks); however,
there is no liability cover whatsoever.