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The Insurance Times
drop" cover of Rs. 10 crores excess of Rs.4
crores can be arranged.
This means that there is a "top" additional cover for
Rs. 10 crores, excess of Rs.40 crores and in case
the lower layer limits and reinstatement provisions
are exhausted, coces "drops" down to provide for
additional reinstatement upto Rs.10 crores.
Q. Discuss the scope of the "follow the
fortunes" clause in a treaty agreement.
Ans: The clause generally reads as:
"All acceptances hereunder shall be at the same gross
rates, terms and conditions as and to follow the
settlement of the company and the reinsurer shall follow
the fortunes of the company in regard to the cessions
in which the reinsurer by virtue of this agreement takes
part"
"Follow the fortunes" simply means that the reinsurer
follows the ceding company in every respect as far
cessions to the treaty are concerned.
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