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REINSURANCE REINSURANCE CONTRACT WORDING ORDERFORM

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REINSURANCE CONTRACT WORDING

INTRODUCTION

MINDY POLLACK
Vice President, Claims
NAC REINSURANCE CORPORATION

1

THE REINSURANCE CONTRACTópage1
The Reinsurance Business and Agreement. Emerging Issues: Dispute Resolution, Coverages, Regulation (State and Federal), Insolvency, and General Wording.

MARILYN LAUGHLIN
Assistant Vice President
CNA REINSURANCE GROUP

2

GENERAL CLAUSES FOR MOST TREATIES--40
Eighteen clauses for underwriting, financial, and legal considerations, including Pollution and Seepage Exclusion, Self-Insured Obligations, Special Termination, Funding of Reserves, Commutation, Offset, and Insolvency, with fifty-three sample clauses.

TREATY REINSURANCE

R. MICHAEL CASS, CPCU
President
R.M. CASS ASSOCIATES

3

QUOTA SHARE--110
Seven clauses, including Business Covered, Limit and Retention, Definitions, Premium and Commission, Reports and Remittances, Loss Notices and Settlements, Errors and Omissions, and thirty-two samples.

MICHAEL HOLLENBACH
Vice President and Principal
TOWERS PERRIN REINSURANCE

4

SURPLUS SHARE--140
A seventeen-question checklist and twelve clauses to use in making a contract, including thirty-seven sample clauses, such as Assumption of Portfolio, Term (runoff v. cutoff, location of ceding company v. risk location, and losses extending beyond the contract period), Cessions and Limits, Method of Cession, Losses Excess of Policy Limits and Extra Contractual Obligations, and Follow the Fortunes and Original Conditions, with thirty-seven samples.

SARAH J. PETERSON, J.D., CPCU
Vice President, Contract Department
AMERICAN REINSURANCE COMPANY

BERNICE GORDON, J.D.
Assistant Vice President and Manager, Contract Department
FOLKSAMERICA GROUP

5

CLAUSES COMMON TO EXCESS OF LOSS--204
Ten clauses, including Ultimate Net Loss and Retained Lines, Occurrence (coverage theories, treaty applications), Joint Account, Subrogation and Salvage, and Warranty, with thirty-five sample clauses.

WILLIAM H. EYRE, CPCU
Retired Executive Vice President
INTERE INTERMEDIARIES, INC.

6

PROPERTY PER RISK EXCESS OF LOSS--244
Seven clauses, including Retention and Limit, Ultimate Net Loss, Rate and Premium, and a Variation of Property Per Risk: The "Combination" plan, with fourteen sample articles and alternatives.

RICHARD M. SHAW
Assistant Vice President and Associate General Counsel
RELIANCE INSURANCE COMPANY

7

CASUALTY EXCESS OF LOSS--271
Sixteen clauses and issues, including Coverage Trigger and Date of Loss, Aggregate Extension and Aggregate Extraction, Reinstatements and Loss Caps, Annual Aggregate Deductible and Loss Corridor, Structured Settlement Ramifications, and ninety-one sample clauses.

GERALD A. SPORE, CPCU
Retired Senior Vice President
KEMPER REINSURANCE CORPORATION

8

CATASTROPHE EXCESS OF LOSS--358
Eight clauses, including Limit and Retention, Reinstatement, Definitions of Occurrence, Two-Risk Warranties, and Exclusions, with twenty-four samples.

PATRICK J. MCFADDEN
Senior Vice President
TOWERS PERRIN REINSURANCE

9

AGGREGATE EXCESS OF LOSS AND STOP-LOSS--394
An eighteen-question checklist and seven clauses to create an aggregate contract, with sixteen sample clauses.

FACULTATIVE REINSURANCE

THOMAS M. TOBIN
Senior Vice President, General Counsel and Corporate Secretary
SKANDIA AMERICA GROUP

10

THE FACULTATIVE CONTRACT--426
Formation and Declarations: Location, Reinsurerís Limit, Term and Effective Date. Reinsuring Agreements and Conditions: Agreements, Liability, Retention, Bases of Reinsurance, Claims, Cooperation of the Company, Insolvency, Taxes, Offset, Prior Effectiveness, Cancellation, Intermediary, Arbitration. Thirteen sample clauses.

SPECIALIZED LINES

JOHN K. WITHERSPOON, JR., CPCU
Vice President
GLOBAL CAPITAL REINSURANCE LTD.

11

OCEAN MARINE REINSURANCE--450
Classes: Cargo, Hull, Builders Risks, Protection and Indemnity, Offshore Oil and Gas Exploration. Characteristics: judgement-rated, underwriting facilities, implied conditions, and unusual language. Clauses Treated Differently in Ocean Marine Reinsurance Contracts: Exclusions, Limits, Commencement and Termination, Follow the Fortunes, Ultimate Net Loss, Right to Reinsure, Premium and Commission, Profit Commission, Arbitration, Service of Suit, Special Termination. Twenty-one sample clauses.

D. ROBERT MARSDEN, JR.
Vice President
CARVILL AMERICA

12

AVIATION REINSURANCE--484
Characteristics: the market, interests, exposures, types of cover. Clauses: Business Covered, Amount of Cover, Attachment and Termination, Premium and Commission, Portfolio Transfer, Loss Adjustment Expenses, Subrogation and Salvage, Definition of Occurrence, Aggregate Extension, Interlocking, Loss in Excess of Original Policy Limits and Extra Contractual Obligations, Aviation Grounding Liability, Loss Settlements, Underlying Recoveries. Exclusions: Assumed Reinsurance, War and Hijacking, Seepage and Pollution, Nuclear Incident. Summary. Forty-one sample clauses.

RICHARD S. SKEWES
Vice President
GENERAL REINSURANCE CORPORATION

13

SURETY, FIDELITY, AND FINANCIAL GUARANTEE BONDS--522
Determining Net Retention, Accumulation of Exposures, Cosuretyship, Allocation of Reinsurerís Liability, Exclusions and Special Acceptances, with reasons to enter or avoid the market, and thirteen sample clauses.

JACK R. SCOTT
Senior Counsel
CIGNA CORPORATION

14

LIFE REINSURANCE--560
Characteristics. Clauses: Insolvency, Offset, Parties to the Agreement (Privity of Contract), Claims Expenses and Extra Contractual Damages, Recapture, Errors and Omissions, Liability. Summary, including eleven sample clauses.

OTHER ASPECTS

JOHN F. LANGEN
Senior Vice President
ALEXANDER REINSURANCE INTERMEDIARIES, INC.

15

SPECIAL CLAUSES AND ENDORSEMENTS--582
Follow the Fortunes, Losses in Excess of Original Policy Limits, Extra Contractual Obligations, Aggregate Extension, Interlocking, Guaranty Agreements (Cut-Through Endorsements). Twenty-three sample clauses.

JEAN F. (Jeff) WEBB IV, CPCU,
Retired Senior Vice President and Director, Property Treaty Department
PRUDENTIAL REINSURANCE COMPANY

16

PRICING--620
Commission clauses (Flat, Contingent, Sliding Scale), Rating and Premium (rating bases, types of rates), Funded Covers, Reinstatement, with improved wordings and twenty-seven samples and calculations.

ROBERT F. SALM
(1921-1987)
Retired Assistant Vice President
CONTINENTAL CASUALTY COMPANY

17

RETROCESSION--672
Adaption of Retrocession to clauses such as Exclusions, Warranties, Definitions, Aggregate Excess and Stop-Loss, Aggregate Extension, Interlocking, Aggregate Extraction, Arbitration. Caveats: Restrictive Conditions, Extra Contractual Obligations, Excess of Policy Limits, Contingent Commission Problems, Aggregate Extension Coverage, Claims-made Coverage, Common Cause Losses.

CHARLES E. HEIDEN
Retired Vice President in Charge of the Treaty Department
SULLIVAN PAYNE CO.

18

CONTRACT DRAFTING TECHNIQUES--702
For a logical sequence of articles, twenty-four are given for an excess agreement, twenty-six for a share, with refinements suggested for all. A review of several hundred reinsurance contracts produced fifteen most frequently observed mistakes, arranged as a checklist.