Principles
This principle requires both the insurer and the insured to disclose all material facts relevant to the insurance contract. Any misrepresentation or concealment can lead to the policy being voided. It ensures trust and transparency, allowing the insurer to accurately assess risk and set premiums
Utmost Good Faith
This clause limits the maximum amount of a single risk that may be ceded to the treaty.
Cession Limit
The ______ clause limits the amount of cover available under the contract by specifying the number of times the limit of indemnity, or any portion of it, may be automatically reinstated after loss.
Reinstatement
This clause ensures that if one provision of the contract is found to be invalid or unenforceable, the remainder of the agreement continues in force.
Severability
This principle prevents an insured from profiting from a loss and aims to restore them to their pre-loss position.
Indemnity
The _____ ______ establishes the maximum loss (usually caused by a catastrophic event) covered by the contract. If a single loss exceeds the limit, the excess is retained by the ceding company.
Event Limit
This amount must be exhausted by the cedant before the reinsurer becomes liable.
Retention or Priority
This clause allows amounts owed by one party to be deducted from amounts owed by the other party under the contract.
Offset
If the same risk is insured with multiple insurers, the insured cannot claim full compensation from each. Instead, each insurer contributes proportionally to the loss, preventing overcompensation
Contribution
Pro Rata contracts usually include a fixed, sliding scale, or profit _____
Commission
This clause provides the period during which losses must occur to be aggregated into a single catastrophe.
Loss occurrence, Hours clause
This clause restricts the disclosure of treaty information, business data, claims information, and other non-public information received under the contract.
Confidentiality
After the insurer compensates the insured, the right to recover from a third party responsible for the loss transfers to the insurer. This allows the insurer to pursue legal remedies to recoup the amount paid
Subrogation
This clause requires reinsurers to accept the cedant's good faith underwriting, claims handling, and settlement decisions, provided they are made within the terms and conditions of the original policy and the reinsurance contract.
Follow the Fortunes
The ______ clause is central to excess of loss reinsurance, and describes the loss to which the treaty limits (and deductibles) are applied. In short, the ______ is the sum actually paid by the reinsured in settlement of losses or liability after agreed deductions
Ultimate Net Loss
This clause gives reinsurers the right to inspect underwriting, accounting, and claims files relating to business ceded under the treaty.
Access to Records Clause / Inspection of Records
This principle requires a direct financial interest in the subject matter of the insurance.
Insurable interest
Pro Rata contracts do not usually include the reporting requirements and payment due dates because losses are already reported and remitted as part of ____ clause
Reports and Remittances
The net retained lines clause states that the contract applies only to the amount of loss retained by the reinsured for its own account after relevant deductions.
Net Retained Lines
This clause provides a mechanism for resolving disputes through a panel of arbitrators rather than through the courts.
Arbitration