Reinsurance Contract an Legal Wordings

25 August 2020

Vanisree Gounden, Tony Tsuen and Nkejane Mofokeng

Reinsurance Contract and Legal WordingsHow do we make wordings clearer?

225 August 2020LIMA Legal Wording Training 2020

Agenda Slide

1. Introduction –Underwriting and Legal Perspectives

2. List of Treaty Wordings and Clauses (Selected one’s top be discussed)

▪ Infectious Epidemics/ Pandemics Exclusion or Contagious Diseases Exclusion

▪ Sanctions

▪ Physical Damage Proviso

▪ Follow the Fortunes

▪ Ex Gratia Payments

3. Legal View of Wording focusing on the following:-

▪ Governing laws and disputes

▪ Errors and Omissions

▪ Data Protection

4. Discussions and Questions

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Introduction 1


Introduction

Treaty terms and conditions form the fundamental basis of the Contract

and care should be taken in addressing coverage issues accurately.

It is imperative that both parties understand these terms and conditions.

Contract Special Conditions and Exclusions must be clearly understood.

Contract wordings are aligned by the Groups Risk Appetite and Business

Philosophy.

Underwriting perspective


Introduction

The focus of the Legal Wording Training is to create awareness on the importance of having the correct legal

wording in Treaties and Facultative terms and conditions.

It is imperative that both parties to these reinsurance agreements understand the terms and conditions.

Legal Perspective

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Examples of Treaty Clauses 2

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Most Important Standard Terms & Conditions

▪ War, Riot and Terrorism

▪ Computer Losses General Exclusion

▪ Detention, Confiscation and Forfeiture

▪ Nuclear Energy Risks Exclusion

▪ Total Asbestos Exclusion

▪ Infectious Epidemics/ Pandemics Exclusion or Contagious Diseases Exclusion

▪ SASRAI/ NASRIA (for the South African Clients)

▪ Sanctions

▪ Transmission and Distribution Lines

▪ Physical Damage Proviso

Others to also consider

▪ Pollution and Contamination (Where Engineering Class of Business is covered under the Treaty)

Source: MRM Media Portal

25 August 2020 8To edit footer: Insert > Header & Footer (title of presentation and name of speaker)

Other Conditions (selected few)

▪ Definition of Losses Occurrence

▪ Follow the Fortunes

▪ Premium

▪ Claims Payments/ Settlements

▪ Ex Gratia Claims Payments

▪ Errors and Omissions

▪ Prior Facultative Reinsurance

▪ Termination

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Legal View of Wordings and Clauses 3

25 August 2020 10LIMA Legal Wording Training 2020

Legal Wordings that we consider fundamental and

underlying

Governing laws and disputes

Errors and Omissions

Data Protection


Governing Laws and Disputes

▪ The purpose of the Governing Laws and Disputes

clause is to ensure that both parties agree to and

are aware of the law that apply to the reinsurance

arrangement and also which laws need to be

complied with at all times.

▪ A fundamental of this clause would be: -

The governing law of this Agreement is the law of the

Republic of South Africa.

Parties may also agree that the dispute be referred to

arbitration in accordance with the provisions of the

Arbitration Act, Act No 42 of 1965.

The arbitration shall be held in Johannesburg and in

English.



Errors and Omissions

▪ This is a standard clause across all reinsurance agreements.

▪ This is to correct an error that may be identified during the period of a reinsurance agreement.

▪ A clause of this nature would protect both parties.

▪ An example of this clause would be: -

Any inadvertent error or omission on the part of either party shall not relieve either party from any liability which would

otherwise attach under the agreement, provided that such error or omission is rectified as soon as possible after discovery.

Such rectification shall include payment for any loss incurred by either party as a consequence of the error or omission.



Data Protection

General

• With various pieces of regulatory requirements in place governing personalinformation and confidentiality, it is fundamental that this clause is part of anyreinsurance agreement.

• Local regulatory requirements can be reference as per the jurisdiction applicableand even to cater for governing laws.

• Both parties need to ensure that the correct underwriting and claims data is sharedin order for the correct reinsurance arrangements to be put in place.

• Breach of confidentiality (data breaches) and complaints are investigated by theregulator from time to time.

• We enter into Non-Disclosure Agreements from time to time as well.

Confidential Information

• Confidential Information means all commercially sensitive information which is notreadily available in the normal course of business. Confidential Information includesnot only written information but also information transferred orally, visually,electronically or by any other means.

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Discussions and Questions 4

Thank You

4

5

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Documents

Reinsurance Contract an Legal Wordings