|CANC CL||Cancellation Clause|
A method of SPREAD LOSS rating
A description of an EXCESS OF LOSS programme where all layers are capable of dropping to a lower layer so as to give additional low level reinstatement coverage. See also TOP AND DROP.
Under proportional treaties claim recoveries are usually made in the accounts. However in the event that a loss settled by the reinsured exceeds a predetermined amount the reinsured has the option to request from the reinsurer immediate settlement outside the regular accounts.
|CATASTROPHE EXCESS OF LOSS||
A form of EXCESS OF LOSS reinsurance which indemnifies a REINSURED against an amount of loss in excess of a specified amount as the result of an accumulation of losses arising from a catastrophic event or a series of catastrophic events.
|CATASTROPHE REINSURANCE||See CATASTROPHE EXCESS OF LOSS|
Since shares of risks are ceded under proportional treaties, the reinsured is often referred to as the "cedant", the "cedent" or the "ceding company".
Reinsurers pay a commission to the reinsured to reimburse it for expenses incurred in obtaining the original business as well as a contribution to the expenses of management of the reinsured. See also OVERRIDING COMMISSION.
|CEDING COMPANY||See CEDANT|
|CESSION||The amount ceded under a proportional reinsurance contract.|
|CHAIN LADDER STATISTICS||A method of showing LOSS DEVELOPMENT statistics.|
|CHANGE OF LAW CLAUSE||
A clause often included in EXCESS OF LOSS treaties where the amount of the original loss is in accordance with a scale of benefits laid down in Law such as in certain forms of Workers’ Compensation. Thus a change in the scale of benefits could materially increase the reinsurer’s liability, sometimes retroactively. A variation of this clause provides that for the purposes of the reinsurance contract it is deemed that the scale of benefits in force at inception of the treaty apply regardless of the change in law. Another variation provides for the terms of the treaty to be renegotiated in the event of such a Change of Law.
|CHANGE OF UNDERWRITING POLICY CLAUSE||
A clause used to ensure that the reinsured does not, after placing a treaty with reinsurers, change its underwriting practices with regard to the business covered by the treaty without first obtaining reinsurers’ agreement.
|CLAIMS ADVICE CLAUSE||
A requirement for the reinsured to advise the reinsurer immediately of any accident or event which might give rise to a loss under the reinsurance. See also the EXTENDED LOSS REPORTING CLAUSE.
|CLAIMS CO-OPERATION CLAUSE||
A clause requiring that the reinsured shall advise the reinsurer immediately the reinsured is aware of a loss that is likely to involve the reinsurance and that the reinsured must co-operate with the reinsurer at all times in the negotiation and settlement of the loss.
A form of cover where only claims notified during the period of insurance or reinsurance are covered. See also LOSSES OCCURRING and RISKS ATTACHING.
|CLAIMS SERIES CLAUSE||
This clause is designed to define a claims series event by relating all claims from the same specific common cause involving one original insured arising from a product of the same design and specification. This clause was introduced to replace the AGGREGATE EXTENSION CLAUSE.
The practice of transferring premium and loss portfolios from one year to another. See PREMIUM PORTFOLIO and LOSS PORTFOLIO.
The document used for CLOSING A RISK.
|CLOSING A RISK||
The procedure for submitting accounting details to an underwriter who has written a risk. May be combined with a policy signing procedure.
|CLOSING AN ACCOUNT||
Making a reinsurance provision to cover outstanding losses, so that reserves and profit can be released. See also REINSURANCE TO CLOSE.
|CO-INSURANCE||Where a number of different insurers subscribe to a single insurance policy.|
A requirement that the reinsured bears, in addition to the deductible, a portion of the coverage under the treaty un-reinsured and for its own account. Intended to ensure that the reinsured retains an interest in loss minimisation even after the deductible has been exceeded. A co-reinsurance provision in LMX business has some effect on reducing the SPIRAL.
|COMMISSION||See CEDING COMMISSION|
|COMPROMISED TOTAL LOSS||
An agreement made between insurers and insured whereby in the event that the cost of repairs to a vessel exceed a certain amount the insurers will declare the vessel as being a total loss. instead of repairing it.
|CONDS||The conditions of Insurance or reinsurance|
A clause requiring each party to a contract to treat the contract, and the information supplied therewith, as confidential and to not use such information to the detriment of the other party.
See PROFIT COMMISSION
Most proportional treaties are continuous in the sense that, once they have incepted, they can be terminated only upon notice of cancellation being given in the proper form. Where a reinsurer is allowed only to accept Fixed Term treaties it will make its acceptance of a continuous treaty subject to as "NCAD" which effectively means that the reinsurer has issued notice to terminate its participation at the end of the one year period. That reinsurer may well renew the treaty for a further period or periods.
|CONTRIBUTORY REINSURANCE||An term used, generally in the United States to refer to proportional reinsurance.|
|CONVERTIBLE CURRENCY||Any currency other than Sterling, US Dollars and Canadian Dollars|
A clause sometimes found as part of the CLAIMS CLAUSE under EXCESS OF LOSS treaties which provides for claims costs and loss adjustment expresses to be shared separately between reinsured and reinsurer in the proportions which the deductible and the reinsurance recovery bear to the indemnity. Normally, within the terms of the ULTIMATE NET LOSS CLAUSE, these costs and expenses form part of the total claim to the TREATY.
A document issued by a broker to its client setting out the terms on which it has effected the insurance or reinsurance.
Where the original business is written in more than one currency some provision needs to be made for conversion of premiums and losses between the other currencies and the main currency for the purposes of issuing accounting documentation. Some equitable basis is usually stipulated, such as the rate of exchange actually used by the reinsured or the rate applying on the transaction date, etc. See also CURRENCY FLUCTUATION CLAUSE.
|CURRENCY FLUCTUATION CLAUSE||
A clause which is often contained in treaties where the deductible and limit are expressed in one currency, but where the reinsured’s business may be written in other currencies (and claims may arise in those currencies). In excess of loss reinsurance the whole of any exchange fluctuation would normally be attributable to the reinsurer. Most versions of the clause which are in current use aim to share the effects of the devaluation of the currency in which the reinsurance contract is written (the base currency) by sharing the value of the fluctuation as between that currency and the currency of the claim in proportion to the deductible and the recovery.
|CUT - OFF||
A provision of a reinsurance contract stating that the REINSURER will not be liable for loss as a result of loss occurrences which take place after the date of termination of the contract.
A clause occasionally found in treaties (mainly in US) which allows the insured to recover directly from the reinsurer in the event of a failure by the reinsured to pay a loss due to specified circumstances. Because there are entirely separate contractual relationships as between insured and insurer (reinsured) and between reinsured and reinsurer under English law there is no privity of contract between insured and reinsurer so that such a clause would not be legally enforceable.