Chapter 2: DUTIES OF THE REINSURER AND THE REINSURED
Section 1: General Duties
Rapporteur: Jeff Stempel
Version: 1.0, Nov. 2019
Article 2.1.1
(Duties in general)
Throughout the negotiation, formation, operation, termination or avoidance of the contract, the parties owe one another duties set forth in this Chapter.
Article 2.1.2
(Duty of utmost good faith)
The parties owe one another the duty of utmost good faith. “Utmost Good Faith” means honesty and transparency as well as fairly taking into account the interests of the other party.
Article 2.1.3
(Confidentiality)
The parties shall treat information provided one another as confidential. Absent permission, they shall not disclose it to third parties except where required by law and except as necessary to provide information to authorized persons involved in the transaction including professional advisers, auditors and retrocessionaires.
Article 2.1.4
(Dispute resolution)
The parties shall make reasonable and diligent efforts to resolve disputes arising pursuant to the contract as expeditiously and efficiently as possible.
Section 2: Precontractual Duty of the Reinsured
Rapporteur: Jeff Stempel
Article 2.2.1
(Duty of disclosure)
In seeking reinsurance cover, a prospective reinsured shall provide the reinsurer with all information of which it is or reasonably ought to be aware and which is material to the risks to be assumed by the reinsurer. Information is material to a risk if the information is of the type that would affect a reasonable and prudent reinsurer’s decision as to whether to accept the risk and if so under which terms and conditions and for which premium.
Section 3: Duties owed during the Contract Period
Rapporteur: Jeff Stempel
Article 2.3.1
(Premium payment)
Premiums shall be paid by the reinsured in accordance with the terms of the contract. The reinsurer is required to demand payment in order to trigger the reinsured’s payment obligation. Premiums shall be paid promptly after demand has been made.
Article 2.3.2
(Contract documentation)
The parties shall cooperate regarding documentation of any agreement and shall seek reasonably prompt documentation of the contract.
Article 2.3.3
(Reinsurer rights of inspection)
The reinsurer has the right to inspect the records of the reinsured concerning the insured relationship subject to giving reasonable advance notice. The reinsurer’s request must be reasonable regarding time, place and manner of inspection.
Section 4: Duties owed during the claims process
Rapporteur: Jeff Stempel
Article 2.4.1
(Notice of claims)
The reinsured shall give the reinsurer adequate and timely notice of claims subject to the contract of reinsurance and of circumstances that pose a significant chance of resulting in reinsurance coverage.
Article 2.4.2
(Claims handling by the reinsured)
The reinsured shall act reasonably and prudently when addressing claims by its insureds that may result in claims for reinsurance coverage.
Article 2.4.3
(Follow-the-settlements and follow-the-fortunes)
To the extent a loss is covered by the contract of reinsurance, the reinsurer shall
(a) follow the settlements of the reinsured if the losses are arguably within the cover of the primary insurance contract;
(b) follow the fortunes of the reinsured.
Article 2.4.4
(Timely payment of reinsurance claims)
Upon proper presentation of a claim by the reinsured for payment, the reinsurer shall make reasonably prompt payment of amounts to be paid on a claim to the reinsured pursuant to the contract. The parties may specify the precise terms and timing of payments.