Chapter 5: LOSS AGGREGATION
Rapporteur: Oliver D. William
Version: 1.0, Nov. 2019
Article 5.1
(Principle)
(1) With regard to deductibles and limits, the parties may agree in the contract of reinsurance to treat two or more separate losses allocated to the same reinsurance period as one single loss.
(2) In particular, they may agree to treat two or more separate losses as one single loss based on an aggregation per event or an aggregation per cause.
Article 5.2
(Event-based aggregation)
(1) Where the parties agree on an event-based aggregation in a contract reinsuring first-party insurance policies, all losses that occur as a direct consequence of the same materialization of a peril reinsured against shall be considered as arising out of one event.
(2) Where the parties agree on an event-based aggregation in a contract reinsuring third-party liability insurance policies, all losses that occur as a direct consequence of the same act, omission or fact giving rise or allegedly giving rise to the primary insured’s liability shall be considered as arising out of one event.
Article 5.3
(Cause-based aggregation)
(1) Where the parties agree on a cause-based aggregation in a contract reinsuring first-party insurance policies, all losses that occur as the direct consequence of one or multiple events within the meaning of Article 5.2 paragraph (1) shall be considered as arising out of one common cause if it was reasonably foreseeable that a cause of this kind could give rise to such an event.
(2) Where the parties agree on a cause-based aggregation in a contract reinsuring third-party liability insurance policies, all losses that occur as the direct consequence of one or multiple events within the meaning of Article 5.2 paragraph (2) shall be considered as arising out of one common cause if it was reasonably foreseeable that a cause of this kind could give rise to such an event.