The RAA educational program entitled ReContracts: The Art of Designing Reinsurance Contracts and Programs, kicked off on Tuesday March 15, at the Fairmont Hamilton Princess in Bermuda. On Tuesday Kathleen Carroll, of Guy Carpenter & Company, gave a presentation on Reinsurance Contract Terms – Standard, Required and Optional Clauses. Ms. Carroll took the attendees through the history of reinsurance contracts from those that may have been only a page long to present-day contracts, which sometimes exceed seventy pages. The transformation of the reinsurance contract has occurred in large part as a response to the increasing number of reinsurance-related legal disputes over the years. Ms. Carroll explained that expanding liability, arising in particular from latent injury claims, has increased the vulnerability of the reinsurance contract. As a result, she suggested that modern drafters should review each clause in the reinsurance agreement with a critical eye before concluding negotiations.
Ms. Carroll reviewed all of the typical clauses in reinsurance contracts ranging from the “no third party rights” clause to the “access to records clause,” and everything in between. She gave examples of real life disputes that arose out of the particular clauses and attendees shared stories from their own experience. Ms. Carroll approached each clause from the viewpoints of both the cedent and reinsurer and emphasized that for any given provision, each party will have a very different view of what they believe is reasonable and appropriate. In the afternoon session, she moderated a workshop on Reinsurance Contract Interpretation, where the attendees used what they had learned earlier in a collaborative exercise.
The RAA ReContracts program runs from March 15-17. We will continue to post live blogs on this site throughout the remainder of the program.