Article 6.1.1

(Agreement on matching cover)

(1)  This Chapter applies where the parties to the contract agree that the cover provided by the contract of reinsurance shall match the cover provided by the underlying insurance contract:

(a)  with a general term in the contract of reinsurance which incorporates the terms of the underlying insurance contract into the contract of reinsurance by reference; or

(b)  by using express terms in the contract of reinsurance that are identical, or identical in substance, to the terms of the underlying insurance contract; or

(c)  by other means, provided matching cover can be established in accordance with the proper interpretation of the contract of reinsurance.

(2)  Where matching cover is agreed in accordance with paragraph (1)(a), and subject to paragraph (3), only those terms of the underlying insurance contract that are material to the scope or extent of cover shall be regarded as incorporated into the contract of reinsurance (“incorporated matching terms”). Incorporated matching terms may include, but are not limited to, terms that:

(a)  relate to the insured perils and risks;

(b)  are exclusions or exceptions to the insured risk;

(c)  provide for geographical or temporal limits to the risk;

(d)  provide for limits of liability or deductibles;

(e)  are aggregation provisions.

(3)  The parties may agree to exclude particular elements of the scope, or limit the extent, of the matching cover under the contract of reinsurance. In case of conflict between an incorporated matching term and an express term in the contract of reinsurance the latter prevails.