Article 6.3.2

(Cover of XPL and ECO claims)

(1)  Unless otherwise agreed, Excess of Policy Limits (XPL) claims and Extra Contractual Obligations (ECO) claims are not covered under the contract of reinsurance.

(2)  An XPL liability requires a reinsured to pay an amount in excess of the policy limits for claims that are within the scope of cover of the underlying insurance contract.

(3)  An ECO liability requires a reinsured to pay damages to the insured due to its act(s) or omission(s) in handling claims.

(4)  Notwithstanding paragraph (1), the reinsurer shall become liable to the reinsured for XPL and ECO claims to the extent that:

(a)  the reinsurer exercised or assumed sufficient control over the claim on the underlying insurance contract that it is reasonable to hold the reinsurer accountable for the outcome of that claim as if it were the reinsured; or

(b)  the reinsurer’s act(s) or omission(s) caused the reinsured to incur such XPL or ECO claims liabilities so that it is reasonable to hold the reinsurer accountable for such losses.