Exhibit 10.14
WORKERS' COMPENSATION EXCESS OF LOSS
REINSURANCE AGREEMENT
This Agreement is made and entered into by and between CALIFORNIA INDEMNITY
INSURANCE COMPANY, Pleasanton, California, COMMERCIAL CASUALTY INSURANCE
COMPANY, Pleasanton, California, CII INSURANCE COMPANY, Pleasanton, California,
SIERRA INSURANCE COMPANY OF TEXAS, Dallas, Texas, and all of their existing and
future subsidiary companies (hereinafter together called the "Company") and the
Reinsurer specifically identified on the signature page of this Agreement
(hereinafter called the "Reinsurer").
ARTICLE 1
BUSINESS REINSURED
This Agreement is to indemnify the Company in respect of the net excess
liability as a result of any loss or losses which may occur during the term of
the Agreement under any Policies classified by the Company as statutory Workers'
Compensation, including Employers' Liability and United States Xxxxxxxxx and
Harbor Workers' Compensation Act, written or renewed by the Company, subject to
the terms and conditions herein contained.
ARTICLE 2
COVER
The Reinsurer will be liable in respect of each and every Loss Occurrence,
irrespective of the number and kinds of Policies involved, for the Ultimate Net
Loss over and above an initial Ultimate Net Loss of $250,000 each and every Loss
Occurrence, subject to a limit of liability to the Reinsurer of $250,000 each
and every Loss Occurrence.
ARTICLE 3
commencement and TERMination
This Agreement shall become effective at 12:01 a.m., Local Standard Time, July
1, 2000, and shall remain in full force and effect until terminated as provided
in the following paragraph.
Either the Company or the Reinsurer shall have the right to terminate this
Agreement as of 12:01 a.m., Local Standard Time, any July 1, by giving 90 days'
prior notice in writing via either Certified or Registered Mail, return receipt
requested.
Upon termination of this Agreement, the entire liability of the Reinsurer for
losses occurring subsequent to termination of this Agreement shall cease
concurrently with the termination date of this Agreement.
However, the Company will have the option of requiring the Reinsurer to continue
to cover all Policies which are in force at the date of termination of this
Agreement until the natural expiration or anniversary of such Policies,
whichever occurs first, but in no event longer than 12 months plus odd time, not
to exceed 18 months in all from the date of termination of this Agreement. The
premium applicable to the run-off period, if any, shall be mutually agreed by
the parties at the time of termination.
Should this Agreement terminate or should an anniversary date occur while a loss
covered hereunder is in progress, the Reinsurer shall be responsible for the
loss in progress in the same manner and to the same extent it would have been
responsible had the Agreement terminated or anniversary occurred the day
following the conclusion of the loss in progress.
Should a Loss Occurrence involve more than one insured or policy and more than
one reinsurance Agreement period, the Reinsurer's limit and the Company's
retention as respects the claim or claims covered under this Agreement shall be
the percentage of the limit and retention of this Agreement that the amount of
the covered claim or claims bears to the total of all claims in the Loss
Occurrence.
ARTICLE 4
TERRITORY
This Agreement applies to losses arising out of Policies written in the United
States of America, its territories and possessions, wherever occurring.
ARTICLE 5
EXCLUSIONS
This Agreement does not cover:
1. Assumed reinsurance, unless assumed (a) from intercompany pooling
arrangements or (b) from a fronting company if the Company manages the
underwriting and claims of such fronting company.
2. Nuclear risks as defined in the "Nuclear Incident Exclusion
Clause - Liability - Reinsurance" attached to and forming part
of this Agreement.
3. Financial Guarantee and Insolvency business when written as such.
4. Any liability derived from any Pool, association or similar
facility, directly as a member or indirectly by way of
assessment, reinsurance or similar mechanisms.
5. Liability of the Company arising by contract, operation of law, or
otherwise, from its participation or membership, whether voluntary or
involuntary, in any insolvency fund. "Insolvency Fund" includes any
guarantee fund, insolvency fund, plan, pool, association, fund or other
arrangement, howsoever denominated, established or governed, which
provides for any assessment of or payment or assumption by the Fund of
part or all of any claim, debt, charge, fee, or other obligation of any
insurer, or its successors or assigns, which has been declared by any
competent authority to be insolvent, or which is otherwise deemed
unable to meet any claim, debt, charge, fee or other obligation in
whole or in part.
6. All claims arising from employment relating to the following industries:
a. Operations where the governing classifications are Railroad
class codes.
b. Underground mining.
c. Oil and Gas drilling, refining, production or manufacturing.
d. Tunneling Operations involving tunnels over 100 feet in length
(auguring shall not be considered tunneling).
e. The manufacturing, storage or transportation of fireworks,
ammunition, nitroglycerin or other explosive substances
or devices.
f. Professional sports teams.
g. Asbestos Abatement when written as such.
7. The following classes of employment except where the exposures are
incidental to an original insured's overall Workers' Compensation
exposure as measured by payroll. Incidental is defined for the purposes
of this Agreement as less than 10% of the insured's overall Workers'
Compensation payroll (excluding clerical):
a. Construction and maintenance of xxxxxx dams.
b. Tower, steeple and chimney shaft work, but this exclusion does
not include church work.
8. Policies attaching excess of a self-insured retention or a deductible
of $50,000 or more.
9. Aggregate Policies.
10. Business underwritten on behalf of the Company by Managing General
Underwriters or Managing General Agencies (MGU's or MGA's).
ARTICLE 6
PREMIUM
A. The Company will pay the Reinsurer a deposit premium of $2,100,000 for
each Agreement Year that this Agreement remains in force, to be paid in
the amount of $315,000 (15%) on July 1, 2000, $420,000 (20%) on October
1, 2000, $630,000 (30%) on January 1, 2001, and $735,000 (35%) on April
1, 2001.
B. Within 60 days following the end of each Agreement Year, the Company
will calculate a premium at a rate of 1.87% multiplied by the Company's
Gross Net Earned Premium Income. Should the premium so calculated
exceed the deposit premium paid in accordance with Paragraph A. above,
the Company will immediately pay the Reinsurer the difference. Should
the premium so calculated be less than the deposit premium, the
Reinsurer will immediately pay the Company the difference subject to a
minimum premium of $1,400,000 each Agreement Year. Any additional
premium due the Reinsurer shall be remitted with the Company's report
and any return premium due the Company shall be remitted by the
Reinsurer within 30 days after receipt and verification of the
Company's report.
C. Within 60 days after the end of each Agreement Year, a report of the
Company's Gross Net Earned Premium Income shall be provided to the
Reinsurer in a spreadsheet file listing each Policy incepting during
the Agreement Year along with the respective Policy term, written
premium and calculation of the earned premium during the Agreement Year
for each Policy, regardless of when the respective Policy was booked by
the Company.
ARTICLE 7
REPORTS
Within 60 days following the end of each Agreement Year, the Company will
furnish the Reinsurer with:
X. Xxxxx Net Earned Premium Income of the Company for the Agreement Year.
B. Any other information which the Reinsurer may require to prepare its
Annual Statement which is reasonably available to the Company.
ARTICLE 8
DEFINITIONS
A. The term "Policy" as used in this Agreement shall mean any binder,
policy, or contract of insurance or reinsurance issued, accepted or
held covered provisionally or otherwise, by or on behalf of the
Company.
B. The term "Ultimate Net Loss" as used in this Agreement shall mean the
actual loss paid by the Company, or for which the Company becomes
liable to pay; such loss to include expenses of investigation,
litigation and interest (including interest accrued prior to judgment
where such interest is added to the judgment and interest accrued
subsequent to judgment), statutory penalties, claim-specific
declaratory judgment expenses, 90% of any Extra Contractual Obligation
amount as defined in the EXTRA CONTRACTUAL OBLIGATIONS ARTICLE, 90% of
any Excess Of Policy Limits amount as defined in the EXCESS OF POLICY
LIMITS ARTICLE, and all other Defense and Cost Containment Expenses of
the Company incurred in connection with the loss, including
subrogation, salvage, and recovery expenses.
As respects Policies containing a deductible or self-insured retention
of less than $50,000, and where standard premium is included within the
Company's Gross Net Earned Premium Income, it is understood and agreed
that the Company's Ultimate Net Loss will include the amount of the
deductible or self-insured retention.
All salvages, recoveries or payments recovered or received subsequent
to loss settlement hereunder shall be applied as if recovered or
received prior to the aforesaid settlement, and all necessary
adjustments shall be made by the parties hereto.
For purposes of this definition, the phrase "becomes liable to pay"
shall mean the existence of a judgment which the Company does not
intend to appeal, or a release has been obtained by the Company, or the
Company has accepted a proof of loss.
The phrase "claim-specific declaratory judgment expenses," as used in
this Agreement will mean all expenses incurred by the Company in
connection with declaratory judgment actions brought to determine the
Company's defense and/or indemnification obligations that are allocable
to specific Policies and claims subject to this Agreement. Declaratory
judgment expenses will be deemed to have been incurred by the Company
on the date of the original loss (if any) giving rise to the
declaratory judgment action.
"Defense and Cost Containment Expenses" as used in this Agreement shall
have the meaning given to such terms by the Annual Statement
Instructions.
"Annual Statement Instructions" as used in this Agreement shall mean
the Annual Statement Instructions for Property Casualty Insurance
Companies in effect for the Year 1999 published by the National
Association of Insurance Commissioners and related guidance given by
that organization.
Nothing in this clause shall be construed to mean that losses are not
recoverable hereunder until the Company's Ultimate Net Loss has been
ascertained.
C. The term "Loss Occurrence" as used in this Agreement shall mean any one
disaster or casualty or accident or loss or series of disasters or
casualties or accidents or losses arising out of or caused by one event
except that:
As respects an occupational disease or cumulative trauma suffered by an
employee for which the employer is liable, such occupational disease or
cumulative trauma shall be deemed a separate Loss Occurrence within the
meaning hereof for each employee affected. A loss as respects each
employee affected by an occupational disease or cumulative trauma shall
be deemed to have been sustained by the Company at the date when
compensable disability of the employee commenced, or if there is no
such disability, when the medical treatment commenced, but in no event
later than the last day of employment during the term of the policy or
policies of the Company.
The term "occupational disease" is defined as an abnormal condition
that fulfills all of the following conditions:
1. It is not traceable to a definite compensable accident occurring during
the employee's present or past employment,
2. It has been caused by continued and prolonged exposure to a
disease producing agent or agents present in employee's
occupational environment,
3. It has resulted in disability or death.
The term "cumulative trauma" is defined as an injury that fulfills all
of the following conditions:
1. It is not traceable to a definite compensable accident occurring during
the employee's present or past employment,
2. It has occurred from, and has been aggravated by, a repetitive
employment related practice,
3. It has resulted in disability or death.
D. The term Managing General Underwriter as used in this Agreement shall
mean any person, firm, association, or corporation (not a part of the
Company reinsured hereunder) that either separately or together with
affiliates, directly underwrites business on behalf of the Company.
The term underwrite as used in this definition shall mean the final
power and authority to accept or reject risk on behalf of the Company
without any veto or other right of rejection in the Company. Underwrite
does not mean only the power to bind.
E. The term Managing General Agent as used in this Agreement shall mean
any person, firm, association, or corporation (not a part of the
Company reinsured hereunder) that either separately or together with
affiliates, directly produces and underwrites business on behalf of the
Company and which adjusts and pays claims on behalf of the Company.
The term underwrite as used in this definition shall mean the final
power and authority to accept or reject risk on behalf of the Company
without any veto or other right of rejection in the Company. Underwrite
does not mean only the power to bind.
F. The term "Gross Net Earned Premium Income (GNEPI)" as used in this
Agreement shall mean gross earned premium income on business subject to this
Agreement after (i) the application of experience modifications, schedule or
other rating plans, premium discounts, expense constants, loss constants and the
application of discounts granted for deductible or self-insured retention plans
less than $10,000 and (ii) adjustment by retrospective rating plan calculations
and dividend rating plan payments. Retrospective rating plan adjustments and
dividend rating plan payments shall be pro rated based on the earned premium of
each individual Policy during the term of this Agreement. The Gross Net Earned
Premium Income will also include the undiscounted premium associated with the
large deductible and self-insured retention Policies, i.e. those deductibles or
self-insured retentions greater than or equal to $10,000, but less than $50,000.
G. The term "Agreement Year" as used in this Agreement shall mean the 12
consecutive months commencing with each July 1.
ARTICLE 9
Net Retained Lines
This Agreement applies only to that portion of any insurances or reinsurances
covered by this Agreement which the Company retains net for its own account. In
calculating the amount of any loss hereunder and also in computing the amount in
excess of which this Agreement attaches, only loss or losses in respect of that
portion of any insurances or reinsurances which the Company retains net for its
own account shall be included. The Reinsurer's liability hereunder in respect of
any loss or losses shall not be increased by reason of the inability of the
Company to collect from any other reinsurers, whether specific or general, any
amounts which may have become due from them whether such inability arises from
the insolvency of such other reinsurers or otherwise.
However, the Company may carry underlying quota share or excess of loss
reinsurance and recoveries made thereon shall be disregarded for all purposes of
this Agreement and shall inure to the sole benefit of the Company and shall not
be used in calculating what portion the Company retains net for its own account.
ARTICLE 10
Currency
The currency to be used for all purposes of this Agreement shall be United
States of America currency.
ARTICLE 11
Loss Funding
A. This clause is only applicable to those Reinsurers who cannot qualify
for credit by the State having jurisdiction over the Company's loss
reserves or has such credit disallowed by the Director or Commissioner
of Insurance of such State.
As regards policies or bonds issued by the Company coming within the
scope of this Agreement, the Company agrees that when it shall file
with the insurance department or set up on its books reserves for
losses covered hereunder which it shall be required to set up by law it
will forward to the Reinsurer a statement showing the proportion of
such loss reserves which is applicable to them.
The Reinsurer hereby agrees that it will apply for and secure delivery
to the Company a clean irrevocable and unconditional Letter of Credit
issued by a bank chosen by the Reinsurer and acceptable to the
appropriate insurance authorities, in an amount equal to the
Reinsurer's proportion of the loss reserves in respect of known
outstanding losses that have been reported to the Reinsurer, loss
expenses relating thereto and Incurred But Not Reported loss and loss
expense as shown in the statement prepared by the Company.
The Letter of Credit shall be "Evergreen" and shall be issued for a
period of not less than one year, and shall be automatically extended
to one year from its date of expiration or any future expiration date
unless thirty (30) days prior to any expiration date, the bank shall
notify the Company by certified or registered mail that it elects not
to consider the Letter of Credit extended for any additional period.
The bank chosen for the issuance of the Letter of Credit shall have no
responsibility whatsoever in connection with the propriety of
withdrawals made by the Company or the disposition of funds withdrawn,
except to ensure that withdrawals are made only upon the order of
properly authorized representatives of the Company.
At annual Intervals, or more frequently as agreed but never more
frequently than semiannually, the Company shall prepare a specific
statement, for the sole purpose of amending the Letter of Credit, of
the Reinsurer's share of known and reported outstanding losses and
Allocated Loss Expenses relating thereto. If the statement shows that
the Reinsurer's share of such losses and Allocated Loss Expenses, and
Incurred But Not Reported loss and loss expense, exceeds the balance of
credit as of the statement date, the Reinsurer shall, within thirty
(30) days after receipt of notice of such excess, secure delivery to
the Company of an amendment of the Letter of Credit increasing the
amount of credit by the amount of such difference. If, however, the
statement shows that the Reinsurer's share of known and reported
outstanding losses plus Allocated Loss Expenses, and Incurred But Not
Reported loss and loss expense, relating thereto is less than the balance of
credit as of the statement date, the Company shall, within thirty (30)
days after receipt of written request form the Reinsurer, release such
excess credit by agreeing to secure an amendment to the Letter of
Credit.
B. In addition to the requirements set forth above, if the Reinsurer ceases
to be admitted for workers compensation insurance in any state at any time in
which there are obligations ceded by the Company under this Agreement or the
Director or Commissioner of Insurance of any state denies credit for reinsurance
liabilities ceded under this Agreement, and such event requires the Company to
increase any deposit that it must make in such state or to such state
authorities accordance with the laws of such state, on account of its direct
workers' compensation premium written in the state, Reinsurer shall forthwith
remit to Company the amount of such increase, which funds Company will hold as
funds withheld under this Agreement. In lieu of such remittance but only to the
extent permitted by and in accordance with the law of such state, Reinsurer, may
underwrite as surety (if admitted to write surety insurance in such state) or
procure from an admitted surety a surety bond naming the Company, as principal,
and such authorities as beneficiary in the form such authorities may require. If
the Reinsurer remits funds under this portion of this Article such funds will be
credited to its obligation to post letters of credit, if it is otherwise so
required.
ARTICLE 12
Taxes
The Company will be liable for taxes (except Federal Excise Tax) on premiums
reported to the Reinsurer hereunder.
Federal Excise Tax applies only to those Reinsurers, excepting Underwriters at
Lloyd's, London and other Reinsurers exempt from the Federal Excise Tax, who are
domiciled outside the United States of America.
The Reinsurer has agreed to allow for the purpose of paying the Federal Excise
Tax 1% of the premium payable hereon to the extent such premium is subject to
Federal Excise Tax.
In the event of any return of premium becoming due hereunder, the Reinsurer will
deduct 1% from the amount of the return, and the Company or its agent should
take steps to recover the Tax from the U.S. Government.
ARTICLE 13
Notice of Loss and Loss Settlements
The Company will promptly advise the Reinsurer, via a quarterly bordereau, of
all claims which in the opinion of the Company may involve the Reinsurer, and of
all subsequent developments on these claims which may materially affect the
position of the Reinsurer. The quarterly bordereau shall include any claim where
the incurred is 50% or more of the Company's retention; and, irrespective of the
incurred or of any question on liability or coverage, any claim involving:
A. Fatalities.
B. Spinal cord injury - paraplegia, quadriplegia.
C. Amputation - requiring prostheses.
D. Brain injuries resulting in impairment of physical functions.
E. Second or Third Degree xxxxx involving 40% or more of the body.
F. Injuries resulting in partial or total paralysis of upper or lower
extremities.
G. Loss of sight in one or both eyes.
In addition, the Company will provide an individual notice of loss to the
Reinsurer when the incurred value of any claim exceeds the retention under this
Agreement.
Any loss settlement made by the Company, provided it is within the terms and
conditions of this Agreement, whether under strict Policy conditions or by way
of compromise, shall be unconditionally binding upon the Reinsurer, however,
ex-gratia payments made by the Company are excluded hereunder.
When so requested the Company will afford the Reinsurer an opportunity to be
associated with the Company, at the expense of the Reinsurer, in the defense of
any claim or suit or proceeding involving this reinsurance and the Company will
cooperate in every respect in the defense of such claim, suit or proceeding.
The Reinsurer will pay its share of loss settlements no later than 14 calendar
days after receipt of proof of loss from the Company.
ARTICLE 14
Extra Contractual Obligations
This Agreement shall protect the Company, subject to the Reinsurer's limit of
liability appearing in the COVER ARTICLE of this Agreement, where the loss
includes any Extra Contractual Obligations as provided for in the definition of
Ultimate Net Loss. "Extra Contractual Obligations" are defined as those
liabilities not covered under any other provision of this Agreement and which
arise from handling of any claim on business covered hereunder, such liabilities
arising because of, but not limited to, the following: failure by the Company to
settle within the Policy limit, or by reason of alleged or actual negligence,
fraud or bad faith in rejecting an offer of settlement or in the preparation of
the defense or in the trial of any action against its insured or in the
preparation or prosecution of an appeal consequent upon such action.
The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original Loss
Occurrence.
However, this Article shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or a corporate officer of the
Company acting individually or collectively or in collusion with any individual
or corporation or any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.
ARTICLE 15
Excess of Policy Limits
In the event the Ultimate Net Loss includes an amount in excess of the Company's
Policy limit, such amount, as provided for in the definition of Ultimate Net
Loss, in excess of the Company's Policy limit shall be added to the amount of
the Company's Policy limit, and the sum thereof shall be covered hereunder,
subject to the Reinsurer's limit of liability appearing in the COVER ARTICLE of
this Agreement.
However, this Article shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or a corporate officer of the
Company acting individually or collectively or in collusion with any individual
or corporation or any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.
For the purpose of this Article, the word "loss" shall mean any amounts for
which the Company would have been contractually liable to pay had it not been
for the limit of the original Policy.
ARTICLE 16
Delay, Omission or Error
Any inadvertent delay, omission or error shall not be held to relieve either
party hereto from any liability which would attach to it hereunder if such
delay, omission or error had not been made, providing such delay, omission or
error is rectified upon discovery.
ARTICLE 17
Inspection
The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect, through its authorized
representatives, all books, records and papers of the Company in connection with
any reinsurance hereunder, or claims in connection herewith. However, no claim
payment due from the Reinsurer shall be withheld or delayed pending the
Reinsurer's exercise of its rights under this Article or any other right to
audit the Company's books and records.
ARTICLE 18
Arbitration
Any dispute arising out of or related in any way to this Agreement, wherever
occurring, including it's formation and validity shall be submitted to
arbitration by a panel of three arbitrators sitting in Las Vegas, Nevada or such
other place as the parties may mutually agree in writing. The Arbitration shall
be conducted under the Procedures for the Resolution of U. S. Insurance and
Reinsurance Disputes as attached (the "Procedures"). The parties hereby select
the following related to the procedures. (1) Alternative Section 6.2 is selected
(2) the list maintained under Section 6.7(a) for the selection of the umpire
will be that of the American Arbitration Association or if that organization
does not maintain a list then by ARISA (U.S.). Should either of these
organizations not maintain a list as required under Section 6.7(a) within 30
calendar days after the appointment of the second arbitrator, either party may
initiate proceedings in the United States District Court for Nevada (Las Vegas
Division) to obtain appointment of the umpire, of if the Federal Court declines
to act, the State Court having jurisdiction over Las Vegas, Nevada. The parties
may each submit a brief summary of the issues in dispute to the Court with the
names of up to three candidates, together with resumes of their experience and
qualification, from which the umpire shall be selected and who shall meet the
requirements of this Agreement.
In addition to the Procedures:
(1) the parties agree that in so far as the Panel looks to the substantive law,
it shall consider the law of the State of California exclusive of that state's
rules with respect to conflicts of law.
(2) within thirty (30) days after notice of appointment of all arbitrators, the
Panel shall meet, and unless the Panel establishes, the parties and the Panel
shall abide by the following deadlines: (a) ninety (90) days for the filing of
the claimant's and respondent's brief and the claimant's reply, (b) sixty (60)
days for the period of discovery.
Addresses for Notice under Section 3 of the Procedures is:
For: California Indemnity Insurance Company
Commercial Casualty Insurance Company
Sierra Insurance Company of Texas
CII Insurance Company
0000 Xxxxx Xxxxxx Xxx
Xxx Xxxxx, Xxxxxx 00000
Attention: General Counsel
Telecopy: (000)000-0000
For: National Union Insurance Company
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxxxxx, President
Telecopy: (000)000-0000
Matters related to the Arbitration and arbitrability and enforcement of this
Agreement shall be subject to the Federal Arbitration
Act (9 U. S. C. Section 1 and following).
This Article shall survive the expiration or termination of this Agreement.
ARTICLE 19
Service of Suit
If the Reinsurer fails to pay any amount claimed to be due hereunder, the
Reinsurer, at the request of the Company, will submit to the jurisdiction of a
Court of competent jurisdiction within the United States of America and will
comply with all requirements necessary to give such court jurisdiction. Service
of process in such suit may be made upon the Commissioner of Insurance State of
California. In any suit instituted against the Reinsurer under this Agreement,
the Reinsurer will abide by the final decision of such court or of any Appellate
Court in the event of an appeal.
The person named above is authorized and directed to accept service of process
on behalf of the Reinsurer in any such suit and, upon request of the Company, to
give a written undertaking to the Company that a general appearance will be
entered on behalf of the Reinsurer in the event such a suit shall be instituted.
Further, pursuant to any statute of any state, territory or district of the
United States of America which makes provision therefor, the Reinsurer hereby
designates the Superintendent, Commissioner or Director of Insurance or other
officer specified for that purpose in the statute, or his successor or
successors in office, as its true and lawful attorney upon whom may be served
any lawful process in any action, suit or proceeding instituted by or on behalf
of the Company or any beneficiary arising out of this Agreement, and hereby
designates the person named above as the party to whom the said officer is
authorized to mail such process or a true copy thereof.
This Article is not intended nor shall it imply nor have the effect that a
dispute arising out of or related to this agreement, whenever occurring, shall
not be submitted to arbitration pursuant to the ARBITRATION ARTICLE. It is
intended to aid in the enforcement of the ARBITRATION ARTICLE and any award
arising under it.
ARTICLe 20
Insolvency
A. In the event of the insolvency and the appointment of a conservator,
liquidator or statutory successor of the Company, the portion of any risk or
obligation assumed by the Reinsurer shall be payable to the conservator,
liquidator or statutory successor on the basis of claims allowed against the
insolvent Company by any court of competent jurisdiction or by any conservator,
liquidator or statutory successor of the Company having authority to allow such
claims, without diminution because of that insolvency or because the
conservator, liquidator or statutory successor has failed to pay all or a
portion of any claims. Payments by the Reinsurer as set forth in this paragraph
shall be made directly to the Company or to its conservator, liquidator or
statutory successor, except where this Contract specifically provides another
payee of such reinsurance in the event of the insolvency of the Company. The
conservator, liquidator or statutory successor of the Company shall give written
notice of the pendency of a claim against the Company indicating the policy or
bond reinsured, within a reasonable time after such claim is filed, and the
Reinsurer may interpose, at its own expense, in the proceeding where such claim
is to be adjudicated, any defense or own expense, in the proceeding where such
claim is to be adjudicated, any defense or defenses which it may deem available
to the Company or its conservator, liquidator or statutory successor. The
expense thus incurred by the Reinsurer shall be payable, subject to the court
approval, out of the estate of the insolvent Company as part of the expense of
conservation or liquidation to the extent of a proportionate share of the
benefit which may accrue to the Company in conservation or liquidation solely as
a result of the defense undertaken by the Reinsurer.
B. Where two or more reinsurers are involved in the same claim and a
majority in interest elect to interpose defense to such claim, the
expense shall be apportioned in accordance with the terms of this
Contract as though such expense had been incurred by the Company.
C. In the event of the insolvency of any company or companies included in
the designation of "Company," this clause will apply only to the insolvent
company or companies.
ARTICLE 21
offset
Each party hereto shall have, and may exercise at any time and from time to
time, the right to offset any balance or balances, whether on account of
premiums or on account of losses or otherwise, due from such party to the other
under this Agreement provided, however, that in the event of the insolvency of a
party hereto, offsets shall only be allowed in accordance with applicable
statutes and regulations.
ARTICLE 22
confidentiality
Any materials provided in the course of inspections or information tendered
pursuant to the Agreement shall be kept confidential by the Reinsurer as against
third parties and its affiliates, unless the disclosure is required pursuant to
process of law or unless the disclosure is to Reinsurer's retrocessionaires,
financial auditors or governing regulatory bodies. Disclosing or using this
information for any purpose beyond the scope of this Agreement, or beyond the
exceptions set forth above, is expressly forbidden without the prior consent of
the Company.
ARTICLE 23
severability
If any provision of this Agreement shall be rendered illegal or unenforceable by
the laws, regulations or public policy of any state, such provision shall be
considered void in such state, but this shall not affect the validity or
enforceability of any other provisions of this Agreement or the enforceability
of such provision in any other jurisdiction.
ARTICLE 24
entire agreement
This Agreement constitutes the entire Agreement between the parties with respect
to the business being reinsured hereunder and the obligations of the parties are
determined solely by the terms of the Agreement. Any changes or modification to
the Agreement shall be made by written amendment to the Agreement and signed by
both parties.
ARTICLE 25
Intermediary
Xxx Xxxxxxxxx & Company, Inc. is hereby recognized as the Intermediary
negotiating this Agreement for all business hereunder. All communications,
including notices, premiums, return premiums, commissions, taxes, losses, loss
adjustment expenses, salvages and loss settlements relating thereto (except
those related to the ARBITRATION ARTICLE) shall be transmitted to the Reinsurer
or the Company through Xxx Xxxxxxxxx & Company, Inc., 0000 Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxxxx 00000. Payments by the Company to the Intermediary
shall be deemed to constitute payment to the Reinsurer. Payments by the
Reinsurer to the Intermediary shall be deemed only to constitute payment to the
Company to the extent that such payments are actually received by the Company.
ARTICLE 26
PARTICIPATION: WORKERS' COMPENSATION EXCESS OF LOSS
-------------
REINSURANCE AGREEMENT
EFFECTIVE: July 1, 2000
This Agreement obligates the Reinsurer for 100.00% of the interests and
liabilities set forth under this Agreement.
The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.
IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:
In New York, New York, this 11th day of January , 2001.
NATIONAL UNION FIRE INSURANCE COMPANY
OF PITTSBURGH, PENNSYLVANIA
Pittsburgh, Pennsylvania
By s/Xxxxx X. Xxxxxxxxxx
(signature)
Xxxxx X. Xxxxxxxxxx
(name)
Assistant Vice President
(title)
and in Las Vegas, Nevada, this 4th day of January , 2001.
CALIFORNIA INDEMNITY INSURANCE COMPANY
COMMERCIAL CASUALTY INSURANCE COMPANY
CII INSURANCE COMPANY
SIERRA INSURANCE COMPANY OF TEXAS
and all of their existing and future subsidiary companies
By s/Xxxxxxxx X. Xxxxxx
--------------------
(signature)
Xxxxxxxx X. Xxxxxx
------------------
(name)
CEO and President
-----------------
(title)
WORKERS' COMPENSATION EXCESS OF LOSS
REINSURANCE AGREEMENT
issued to
CALIFORNIA INDEMNITY INSURANCE COMPANY
COMMERCIAL CASUALTY INSURANCE COMPANY
CII INSURANCE COMPANY
SIERRA INSURANCE COMPANY OF TEXAS
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.
(Wherever the word "Reassured" appears in this clause, it shall be deemed to
read "Reassured," "Reinsured," "Company," or whatever other word is employed
throughout the text of the reinsurance agreement to which this clause is
attached to designate the company or companies reinsured.)
(1) This reinsurance does not cover any loss or liability accruing to the
Reassured as a member of, or subscriber to, any association of insurers or
reinsurers formed for the purpose of covering nuclear energy risks or as a
direct or indirect reinsurer of any such member, subscriber or association.
(2) Without in any way restricting the operation of paragraph (1) of this
Clause it is understood and agreed that for all purposes of this reinsurance all
the original policies of the Reassured (new, renewal and replacement) of the
classes specified in Clause II of this paragraph (2) from the time specified in
Clause III in this paragraph (2) shall be deemed to include the following
provision (specified as the Limited Exclusion Provision):
Limited Exclusion Provision.*
I. It is agreed that the policy does not apply under any liability coverage,
to {injury, sickness, disease, death or with respect to which an
destruction insured under the policy is
bodily injury or property damage also an insured under a
nuclear
energy liability policy issued by Nuclear Energy Liability Insurance
Association, Mutual Atomic Energy Liability Underwriters or Nuclear
Insurance Association of Canada, or would be an insured under any such
policy but for its termination upon exhaustion of its limit of
liability.
II. Family Automobile Policies (liability only), Special Automobile
Policies (private passenger automobiles, liability only), Farmers
Comprehensive Personal Liability Policies (liability only),
Comprehensive Personal Liability Policies (liability only) or policies
of a similar nature; and the liability portion of combination forms
related to the four classes of policies stated above, such as the
Comprehensive Dwelling Policy and the applicable types of Homeowners
Policies.
III. The inception dates and thereafter of all original policies as
described in II above, whether new, renewal or replacement,
being policies which either
(a) become effective on or after 1st May, 1960, or
(b) become effective before that date and contain the Limited
Exclusion Provision set out above; provided this paragraph (2)
shall not be applicable to Family Automobile Policies, Special
Automobile Policies, or policies or combination policies of a
similar nature, issued by the Reassured on New York risks, until
90 days following approval of the Limited Exclusion Provision by
the Governmental Authority having jurisdiction thereof.
(3) Except for those classes of policies specified in Clause II of
paragraph (2) and without in any way restricting the operation of paragraph (1)
of this Clause, it is understood and agreed that for all purposes of this
reinsurance the original liability policies of the Reassured (new, renewal and
replacement) affording the following coverages:
Owners, Landlords and Tenants Liability, Contractual Liability,
Elevator Liability, Owners or Contractors (including railroad)
Protective Liability, Manufacturers and Contractors Liability, Product
Liability, Professional and Malpractice Liability, Storekeepers
Liability, Garage Liability, Automobile Liability (including
Massachusetts Motor Vehicle or Garage Liability)
shall be deemed to include, with respect to such coverages, from the time
specified in Clause V of this paragraph (3), the following provision (specified
as the Broad Exclusion Provision):
Broad Exclusion Provision.*
It is agreed that the policy does not apply:
I. Under any Liability Coverage, to {injury, sickness, disease, death or
destruction
bodily injury or property damage
(a) with respect to which an insured under the policy is also an
insured under a nuclear energy liability policy issued by Nuclear
Energy Liability Insurance Association, Mutual Atomic Energy
Liability Underwriters or Nuclear Insurance Association of Canada,
or would be an insured under any such policy but for its
termination upon exhaustion of its limit of liability; or
(b) resulting from the hazardous properties of nuclear material and
with respect to which (1) any person or organization is required
to maintain financial protection pursuant to the Atomic Energy Act
of 1954, or any law amendatory thereof, or (2) the insured is, or
had this policy not been issued would be, entitled to indemnity
from the United States of America, or any agency thereof, under
any agreement entered into by the United States of America, or any
agency thereof, with any person or organization.
II. Under any Medical Payments Coverage, or under any Supplementary
Payments Provision relating
to {Immediate medical or surgical relief to expenses incurred with
first aid, respect
to {Bodily injury, sickness, disease or resulting from the
death hazardous properties of
bodily injury nuclear material and
arising out of the operation of a nuclear facility by any person or
organization.
III. Under any Liability Coverage, to {injury, sickness, disease, death or
destruction
bodily injury or property damage
resulting from the hazardous properties of nuclear material, if
(a) the nuclear material (1) is at any nuclear facility owned by, or
operated by or on behalf of, an insured or (2) has been discharged
or dispersed therefrom;
(b) the nuclear material is contained in spent fuel or waste at any
time possessed, handled, used, processed, stored, transported or
disposed of by or on behalf of an insured; or
(c) the {injury, sickness, disease, death or destruction arises out of the
bodily injury or property damage furnishing by an
insured of services,
materials, parts or equipment in connection with the planning,
construction, maintenance, operation or use of any nuclear
facility, but if such facility is located within the United States
of America, its territories or possessions or Canada, this
exclusion (c) applies only
to {injury to or destruction of property at such nuclear facility.
property damage to such nuclear facility and any property thereat.
IV. As used in this endorsement:
"hazardous properties" include radioactive, toxic or explosive
properties; "nuclear material" means source material, special nuclear
material or byproduct material; "source material," "special nuclear
material," and "byproduct material" have the meanings given them in the
Atomic Energy Act of 1954 or in any law amendatory thereof; "spent
fuel" means any fuel element or fuel component, solid or liquid, which
has been used or exposed to radiation in a nuclear reactor; "waste"
means any waste material (1) containing byproduct material other than
tailings or wastes produced by the extraction or concentration of
uranium or thorium from any ore processed primarily for its source
material content, and (2) resulting from the operation by any person or
organization of any nuclear facility included under the first two
paragraphs of the definition of nuclear facility; "nuclear facility"
means
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1) separating the
isotopes of uranium or plutonium, (2) processing or utilizing
spent fuel, or (3) handling, processing or packaging waste,
(c) any equipment or device used for the processing, fabricating or
alloying of special nuclear material if at any time the total
amount of such material in the custody of the insured at the
premises where such equipment or device is located consists of or
contains more than 25 grams of plutonium or uranium 233 or any
combination thereof, or more than 250 grams of uranium 235,
(d) any structure, basin, excavation, premises or place prepared or
used for the storage or disposal of waste,
and includes the site on which any of the foregoing is located, all
operations conducted on such site and all premises used for such
operations; "nuclear reactor" means any apparatus designed or used to
sustain nuclear fission in a self-supporting chain reaction or to
contain a xxxxxxxx xxxx of fissionable material;
With respect to injury to or destruction of property, the word "injury"
or destruction "property damage" includes all forms of radioactive
contamination of property. includes all forms of radioactive
contamination of property.
V. The inception dates and thereafter of all original policies affording
coverages specified in this paragraph (3), whether new, renewal or
replacement, being policies which become effective on or after 1st May,
1960, provided this paragraph (3) shall not be applicable to
(i) Garage and Automobile Policies issued by the Reassured on New York
risks, or
(ii) statutory liability insurance required under Chapter 90, General
Laws of Massachusetts,
until 90 days following approval of the Broad Exclusion Provision by
the Governmental Authority having jurisdiction thereof.
(4) Without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that paragraphs (2) and (3) above are not
applicable to original liability policies of the Reassured in Canada and that
with respect to such policies this Clause shall be deemed to include the Nuclear
Energy Liability Exclusion Provisions adopted by the Canadian Underwriters'
Association or the Independent Insurance Conference of Canada.
------------------------------------------------------------------------------
* NOTE. The words printed in italics in the Limited Exclusion Provision and
in the Broad Exclusion Provision shall apply only in relation to original
liability policies which include a Limited Exclusion Provision or a Broad
Exclusion Provision containing those words.
-----------------------------------------------------------------------------
Procedures for the Resolution
of
U.S. Insurance and Reinsurance DisputesDISCLAIMER
The Reinsurance Dispute resolution Task force recommends that
interested parties consult their own legal counsel concerning
these Procedures, their use or interpretation.
These procedures do not necessarily express the views of
individual members of the Reinsurance Dispute Resolution Task
Force or the firms or entities for which they work or which
they represent.
TABLE OF CONTENTS
FOREWORD.................................................i
INTRODUCTION.............................................iii
PROCEDURES FOR THE RESOLUTION OF U.S. INSURANCE AND REINSURANCE DISPUTES
INTRODUCTION.............................................1
DEFINITIONS..............................................2
NOTICE AND TIME PERIODS..................................3
COMMENCEMENT OF ARBITRATION..............................4
RESPONSE BY RESPONDENT...................................5
APPOINTMENT AND COMPOSITION OF THE PANEL.................6
CONFIDENTIALITY..........................................7
INTERIM RELIEF...........................................8
LOCATION OF PROCEEDINGS..................................9
PREHEATING PROCEDURE.....................................10
DISCOVERY................................................11
MEDIATION OR SETTLEMENT..................................12
SUMMARY DISPOSITION AND EX PARTE HEARING.................13
ARBITRATION HEARING......................................14
AWARD....................................................15
ALTERNATIVE STREAMLINED PROCEDURES.......................16
SEVERABILITY.............................................17
FOREWORD
The insurance and reinsurance industries have long recognized the value of
alternative dispute resolution mechanism, demonstrated by the fact that
arbitration clauses can be found in reinsurance contracts dating as far back as
the early 1800's.
'The purpose of these Procedures is to formalize what has been, until now, an ad
hoc, albeit highly developed, process used by the industry for decades. While
various alternative dispute resolution service provide have developed generic
arbitration procedures, and the members of the Task Force appreciate those
efforts, the Task Force believes that specific industry procedures are
beneficial, and needed, in order to combine the experience reflected in the
generic procedures with the custom and practice developed in the insurance and
reliance industries.
It is the hope of the Task Force in member that the Procedures for the
Resolution of U.S. Insurance and Reinsurance Dispute will provide a helpful
framework for the conduct of future industry arbitrations and a sense of greater
certainty at the time of entering into contracts about how disputes will be
handled in the unfortunate event that they arise.
INTRODUCTION
The Reinsurance Dispute Resolution Task Force (Task Force) was established in
the fall of 1997. Its mission was to:
Improve the reinsurance dispute resolution process by identifying
common problems and recommending industry-wide, flexible, business like
solutions.
The Task Force undertook a variety of tasks, one of which was to draft a set of
procedures that could be utilized by the insurance and reinsurance industries
for the resolution of their contractual disputes. This set of procedures is
refined to as the Procedures for the Resolution of U.S. Insurance and
Reinsurance Disputes (Procedures).
In undertaking this effort, the Task Force attempted to balance several goals.
One was to set forth, in writing the actual practice that exists insurance and
reinsurance arbitrations today. The Second was to enhance and clarify minor
procedural issues that sometimes result in unnecessary skirmishes between
Parties. And the third, was to tackle some of the major issues that cause a lack
of confidence and inefficiencies in the current system, and recommend
alternative procedures that might result in greater fairness and a higher level
of certainty to the Parties.
An example of this third goal is the umpire Selection process created in article
6 of the Procedures. The often-used process of selecting an umpire by lot (in
the absence of agreement) is a random, arbitrary one which is prone to potential
manipulation. The umpire selection process reflected in article 6 is intended to
encourage parties to reach agreement on au umpire and remove or reduce the
potential for manipulation, arbitrariness or chance in the event that agreement
can-not be reached. It is intended to motivate the parties to select competent,
well qualified individuals.
In the process of drafting the procedures, the Task Force considered and, in
some cases, debated, at length, many topics. The resolution of some of those
issues are reflected in these Procedures. However, other issues, though they
were fully considered, are ones on which the Task Force took no position and are
not addressed in these Procedures. Examples include the precedential or
collateral effect of arbitration awards and the designation of a choice of law
provision.
Although the Task Force addressed the issue of consolidation involving multiple
reinsurers, the same contract and the same loss, the Task Force declined to
address other circumstances where consolidation might arise. The decision of the
Task Force to limit its consideration of consolidation to the circumstances
described in the optional provision in the sample arbitration clause should not
be construed as an indication of whether Task Force members believed
consolidation was appropriate in other circumstances-
The Task Force, as a whole, believes that the Procedures are an important step
forward in preventing unnecessary friction in the arbitration process and
providing parties with more certainty regarding what to expect from the process.
It is hoped that contracting parties will consider incorporating these
Procedures in their future contracts or, through a separate agreement applying
them to their existing relationships. Parties should fee1 free to incorporate
them, as written, or with modifications appropriate to their unique situations.
PROCEDURES FOR THE RESOLUTION
OF U.S. INSURANCE AND REINSURANCE: DISPUTES
September 1999
1. INTRODUCTION
1.1 These procedures shall be known as the Procedures for the
Resolution of U.S. Insurance and Reinsurance Disputes
("Procedures"). When an agreement, submission or reference
provides for or otherwise refer to arbitration trader the
Procedures for the Resolution of U.S. Insurance and Reinsurance
Disputes, the Parties agree that the arbitration shall be
conducted in accordance with these Procedures.
1.2 The Parties may agree on any procedures not specified herein or
may alter these Procedure by written agreement. Any such
Party-agreed procedures shall be enforceable as if contained in
these Procedures. These Procedures shall control any matters not
changed by the Party-agreed procedures.
1.3 Certain provisions are accompanied by explanatory notes.
If any note conflicts in any way with the Procedures, the
Procedures prevail.
1.4 Any dispute concerning the interpretation of these Procedures
shall be determined by the Panel.
1.5 The Panel shall have all powers and authority not inconsistent
with these Procedures and the Agreement of the Parties.
2. DEFINITIONS
2.1 Arbitration Agreement - an agreement to submit present or future
disputes to arbitration, whether contained in a reinsurance contract or other
written agreement.
2.2 Arbitration Award or award - includes the final award described inP.
15.2 and any interim award.
2.3 Disinterested - as used in P. 16.1 and P. 16.4 means that no member of
the Panel shall be under the control of either party, nor shall any member of
the panel have a financial interest in the outcome of the arbitration.
2.4 Notice Of Arbitration - the notice sent by the petitioner in accordance
withP. 4.1.
2.5 Panel - the body charged with determining the dispute as defined byP.
6.1.
2.6 Party or Parties - the Petitioner and the Respondent and any other
individuals or entities voluntarily, by compulsion or contractually joined in
the proceedings.
2.7 Petitioner - the Party who commences arbitration.
2.8 Procedures - as defined by Article 1.
2.9 Respondent -a Party against whom arbitration is commenced.
2.10 Response - the Response to the Notice of Arbitration sent by the
Respondent in accordance withP. 5.1. 3.
NOTICE AND TIME PERIODS
Notices
3.1 Notices under these Procedures are deemed to be given if
delivered, in accordance with P. 3.2, to a Party's principal place of business
or other address designated by the Party or if delivered to another entity
designated by the Party in there reinsurance contract or other written
agreement.
3.2 Notices required to be given under these Procedures are deemed
to be given:
(a) if sent by fax, on the date transmitted;
(b) if sent by mail upon delivery;
(c) if sent by certified registered mail or another service
which produces a receipt, as indicated on the receipt.
Note 3.2 - --Notices of Arbitration, Responses to Notices of
Arbitration and Appointment of Arbitrator should, where
possible, be given in a manner that produces proof of receipt
(registered or certified mail or courier). After the
arbitration has been commenced, notices and correspondence
should, where possible, be given by instantaneous (fax or
e-mail) or other expedited manner of communication.
Time Periods
3.3 When calculating any time period under these Procedures,
the period shall start to run from the day immediately after that upon
which notice is given. Time will then run continuously (including
non-business days) - If a time period expires at the end of a
non-business day in the country of the recipient the time period will
be deemed extended until the end of the first following business day.
4. COMMENCEMENT OF ARBITRATION PROCEEDINGS
4.1 An arbitration should be initiated by a demand, in writing, that
identifies the (1) Petitioner and the name of the contact person to whom all
communications are to be addressed (including telephone, fax and e-mail
information); (2) Respondent, as identified in the reinsurance contract, against
whom arbitration is sought; (3) contract at issue; and (4) nature of the claims
and/or issues.
4.2 The arbitration is commenced under these Procecures on the date the
Respondent, or its designated representative, receives the Notice of
Arbitration.
4.3 The Petitioner shall identify its Party-appointed arbitrator
in accordance withP. 6.3.
5. RESPONSE BY RESPONDENT
5.1 Parties who receive a demand for arbitration shall respond to the demand, in
writing, within 30 days, and such Response should contain the (1) identification
of the entities on whose behalf the Response is sent and the name of the contact
person to whom all communications are to be addressed (including telephone, fax
and e-mail information); (2) designation of the Respondent's Party-appointed
arbitrator, in accordance with P. 6.3; and (3) identification of any claims of
the Respondent.
6. APPOINTMENT AND COMPOSITION OF TIIE PANEL
6.1 The Panel shall consist of three Disinterested arbitrators, one to
be appointed by the Petitioner, one to be appointed by the Respondent and the
third to be appointed by the two Party-appointed arbitrators. The third
arbitrator shall serve as the umpire, who shall be neutral.
6.2 The arbitrators and umpire shall be persons who are current or former
officers or executives of an insurer or reinsurer.
Alternative 6.2: The arbitrators and umpire shall be persons who are
current or former officers or executives of an insurer or reinsurer or other
professionals with no less than ten years of experience in or serving the
insurance or reinsurance industry.1
6.3 Within thirty (30) days following the commencement of arbitration
proceedings, each Party shall provide the other Party with the identification of
its Party-appointed arbitrator, his or her address (including telephone, fax and
e-mail information), and provide a copy of the arbitrator's cirriculum vitae.
6.4 In the event that either Party fails to appoint an arbitrator within 30 days
of commencement of the arbitration, the non-defaulting Party will appoint an
arbitrator to at as the Party-appointed arbitrator for the defaulting Party.
6.5 The umpire shall be appointed by the two Party-appointed arbitrators as soon
as practical (but no later than 30 days) after the appointment of the second
arbitrator.
6.6 The Party-appointed arbitrators mav consult, in confidence, with the Party
who appointed them concerning the appointment of the umpire.
6.7 (a) Where the two Party-appointed arbitrators have failed to
reach agreement on an umpire within the time specified in P.
6.5 each Party shall exchange, within the time specified in P.
6.5, each Party shall exchange, within 7 days thereafter,
eight names of individuals chosen from the list maintained by
_______________for the purpose of umpire selection.2
(b) Within 7 days of the exchange of names as set forth inP. 6.2(a), the
Party arbitrators shall send a joint request to the umpire candidates to
complete an umpire questionnaire. Candidates will be requested to return such
questionnaire to each Party arbitrator so that it is received within 20 days
from the date the questionnaire is sent. If any individual fails to return a
questionnaire within the required time period or refuses to serve, the process
set forth in this article shall continue with the remaining names. In the event
that one Party's candidate pool of 8 individuals is reduced due to the failure
to return questionnaires or refusals to serve, the other Party shall, within 7
days, reduce its candidate pool to the same number of individuals. If, however,
one Party's candidate pool falls below 3 individuals, that party shall, within
the same 7 days, name additional individuals to replenish its candidate pool to
3 individuals from the list designated in subparagraph(a). Each additional
candidate shall be asked by the Parties to complete an umpire questionnaire and
return such questionnaire to each Party within 20 days from the date the
questionnaire is sent during the same 7 day period that candidate pool is being
replenished to 3 individuals, the other Party shall reduce its candidate pool to
3 individuals. Both Parties shall proceed in accordance with subparagraph (d)
with 3 individuals each.
Note to 6.7(b) - After the return of the questionnaire, if
there are common individuals on the Parties' lists, the
Parties are encouraged to reach agreement among those
individuals without having to proceed to the ranking process.
(c) Within 7 days after the process in subparagraph (b) is
completed, each Party shall select three names from the other
Party's list and notify the other Party of such selection.
(d) Within 7 days after receiving the other Parties' selections as
set forth in subparagraph (c), each Party shall rank each of
the 6 selected umpire names in order of preference, with the
number "1" being the most preferred and notify the other Party
of such ranking. The individual with the lowest total
numerical ranking shall act as umpire. If the ranking results
in a tie, the Parties shall draw lots from among the
individuals tied for the lowest total numerical rank. The
individual chosen by lot shall act as umpire.
(d) If either Party fails to meet the time periods required in
this P. 6.7, the non-defaulting Party will appoint the umpire
from its original candidate pool identified in subparagraph
(a).
Note to 6.7 - Unilateral contact between a Party-appointed
arbitrator and an individual considered for appointment as a
default umpire under this paragraph should not be permitted.
It is intended that the individuals named not be advised of
which Party initiated their selection.
6.8 If after appointment any Party-appointed arbitrator is unable or
unwilling to serve, the party who originally appointed the arbitrator
shall appoint a replacement within 14 days of the party's receipt of
notification of the arbitrator's unavailability. If the Party fails to
do so, the non-defaulting Party will appoint replacement within 14
days.
6.9 If after appointment an -umpire is unable or unwilling to serve, a
replacement umpire shall be chosen by the two Party-appointed
arbitrators as soon as practical (but no later than 14 days) after
notification of the umpire's inability or unwillingness to serve. Where
the two Party-appointed arbitrators are unable to reach agreement, the
Parties shall appoint a replacement umpire in accordance with the
procedure set forth in P. 16.7.
6.10 Unless otherwise awarded by the Panel pursuant to each Party shall bear
the costs of its Party-appointed arbitrator and shall share equally the
cost of the umpire.
7. CONFIDENTIALITY
7.1 All meetings and hearings of the Panel are private and confidential to
the Parties. Only the Panel, the Parties, the duly authorized
representatives of the Parties and others participating in the
proceedings may be admitted to meetings and hearings.
7.2 The Panel and the Parties shall use their best efforts to maintain the
confidential nature of the arbitration proceedings and the Award,
including the hearing and any written explanation of the Award, except
(a) as necessary in connection with a judicial proceeding, relating to
the arbitration or the Award; (b) as other wise required by law,
regulation independent accounting audit or judicial decision; (c) to
support reinsurance or retrocessioal recoveries; or (d) as otherwise
agreed by the Parties. The Parties shall use their best efforts to
maintain this confidentiality when pursuing any of the exceptions set
forth in this paragraph, including the filing of pleadings under seal
when permitted.
8. INTERIM RELIEF
8.1 A Panel may issue orders for interim relief, including pre-
award security.
9. LOCATION OF PROCEEDINGS
9.1 The location of all proceedings shall be at a place specified
in the Arbitration
Agreement or as otherwise agreed to by the Parties. In the
absence of agreement, the location shall be in a convenient
location as determined by the Panel.
10. PRE-HEAR.CVGPROCEDURE
Organizational Meeting
10.1 The Panel shall conduct an organizational meeting with the
Parties and any authorized representatives for the purposes of
clarifying the focus of the arbitration hearing resolving any
outstanding issues relating to the send of the hearing and
establishing a schedule for the conduct of the proceedings in
general. The organizational meeting may be conducted by
telephone if agreed to by the Parties or, in the absence o
agreement, if determined appropriate by the Panel.
10.2 At the organizational meeting, all member of the Panel shall
reveal on the record their past; present and any known future
business and personal relationships with the Parties, the
Parties' counsel with other Panel members, and with potential
in witnesses if identified ' documents provided the Panel
members. Once disclosures have been made by all Panel members,
Parties may be asked by the Panel to accept the Panel as duly
constituted.
10.3 At the organizational meeting, each Party-appointed arbitrator
shall disclose whether communications with the appointing
Party or its counsel have-taken place. In complying with this
disclosure requirement, it is sufficient that the
Party-appointed arbitrator disclose the fact that such
communication has occurred without disclosing the content of
the communication except that Party-appointed arbitrators
shall identify any documents that they have examined relating
to the proceedings. Such documents shall be furnished to the
remainder of the Panel and the other Party.
10.4 The Panel may require that each Party submit concise written
statements of position, including summaries of the facts and
evidence a Party intends to present, discussion of the
applicable law and the basis for the requested award or denial
of relief sought. The statements, which may be in letter form,
shall be provided to the other Party and the Panel at least
7days prior to the organizational meeting.
10.5 A formal record or transcript of the organizational meeting
shall be kept, unless waived by the Parties. The cost of the
record or transcript shall be shared equally by the Parties.
The Panel shall place on the record the disclosures required
by P. 10-2.
10.6 The Panel may allow the Parties to present a brief overview of
the matters set-forth in P. 10.4, whether or not written
Submissions were requested or received by the Panel.
10.7 The Panel shall address the following:
(a) Establish a date for the cut-off of all ex parte communications between
the Parties and their Party-appointed arbitrators;
(b) Outstanding issues, if any, concerning fees or payment schedules of the
arbitrators and/or the umpire;
(c) "Hold Harmless" or indemnification agreement from the Parties flowing
to the Panel;
(d) Confidentiality agreements to ensure the confidentiality provided in
article 7;
(e) The extent to which depositions and other discovery will be allowed and
the date by which they must be completed;
(f) The briefing schedule, including the dates briefs are
due, whether briefs are to be sequential or
simultaneous and whether the briefs have a specified
page limit;
(g) The date by which fact and expert witnesses must be disclosed,
documents exchanged and briefs submitted;
(h) whether the Parties prefer a written rationale for the Panel's
decision; and
(i) Requests, if any, for interim relief as set forth in P. 8.1.
11. DISCOVERY
11.1 The Parties shall cooperate in good faith in the voluntary,
prompt and informal exchange of all not-privileged documents
and other information relevant to the dispute.
11.2 In addition to the voluntary exchange contemplated by P. 11.1,
the Panel shall have the power to order, subject to applicable
privileges, the disclosure of such documents or class of
documents relevant to the dispute as it considers necessary
for the proper resolution of the dispute and to determine the
date by which the documents must be disclosed.
11.3 The Panel shall have the power to authorize the Parties to
conduct such depositions as are reasonably necessary.
11.4 The Panel may require each Party to provide a list of witnesses
whom they intend to call at the hearing.
11.5 The Panel may Emit document production, expert testimony and
witnesses of fact on grounds of number, duplication or
relevance.
12. MEDIATION OR SETTLEMENT
12.1 The Parties may agree, at any stage of the arbitration.
proceedings, to submit to mediation.
12.2 If the Panel determines that settlement may be appropriate
under the circumstances, the Panel may request that the
Parties consider settlement through mediation or otherwise,
provided such efforts do not delay the arbitration
proceedings.
13. SUMMARY DISPOSITION AND EX PARTE HEARING
13.1 The Panel may lieu and determine a motion for summary
disposition of a particular claim or issue, either by
agreement of all Parties or at the request of one Party,
provided the other interested Party has reasonable notice and
opportunity to respond to such request.
Note to 13.1: By authorizing the Panel to grant summary
disposition, the Parties using these Procedures do not intend
to waive their rights under the Federal Arbitration Act to
contest the appropriateness of such an action where such
rights have been reserved.
13-2 If a Party has failed to participate in the pre-hearing
proceedings and the Panel reasonably believes that the Party
will not participate in the hearing, the Panel may proceed
with the hearing on an ex parts basis or may dispose of some
or all issues pursuant to P. 13. 1. The non-participating
Party shall be provided with notice thirty (30) days prior to
the hearing or disposition pursuant to P. 13.1.
14. ARBITRATION HEARING
14.1 Unless the Parties otherwise agree, there should be as
stenographic record kept of the proceedings.
14.2 The Panel may decide whether and to what extent there should
be oral or written evidence or submissions.
14.3 The Panel shall interpret the underlying agreement, which is
the subject of the arbitration, as an honorable engagement and
shall not be obligated to follow the strict rules of law or
evidence. In making their Award, the Panel shall apply the
custom and practice of the insurance and reinsurance industry,
with a view to effecting the general purpose of the underlying
agreement which is the subject of the arbitration.
. 14.4 Subject to the control of the Panel, the Parties may question any
witnesses who appear at the hearing. Panel members may also
question such witnesses.
14.5 A Party may request that the other Party produce at the hearing a
witnesses in their employer under their control without need
of a subpoena. The Panel may issue subpoenas for the
attendance of witnesses or the production of documents. A
Party or the subpoenaed person may file an objection with the
Panel who shall promptly rule on the objection weighing both
the burden on the producing Party and the need of the
proponent for the witness or other evidence.
14.6 The Panel shall require that witnesses testify under oath,
unless waived by all parties. The Panel shall have the
discretion to permit testimony by telephone, affidavit or
recorded by transcript, videotape, or other means, and may
rely upon such evidence as it deems appropriate. Where there
has been no opportunity for cross-examination by the other
Party, such evidence may be permitted by the Panel only for
good cause shown. The Panel may limit testimony to exclude
evidence that would be immaterial or unduly repetitive,
provided that all Parties are afforded the opportunity to
present material and relevant evidence.
14.7 When the Panel determines that all relevant and material
evidence and arguments have been presented, the Panel shall
declare the evidentiary portion of the hearing closed.
14.8 At the conclusion of the evidentiary portion of the hearing,
the Parties shall submit a proposed form of order to the Panel
and to the other Party that precisely identifies the nature of
the relief that the Parties seek from the Panel.
14.9 The Panel shall close the hearing following closing arguments
and/or post hearing briefs, if any.
15. AWARD
15.1 Absent good cause for an extension as determined by the Panel, the Panel
shall render the Award within thirty (30) days after the date of the closing of
the hearing or, if an arbitration hearing has been waived or otherwise dispensed
with, within thirty (30) days after the date that the Panel received all
materials submitted by the Parties for disposition.
15.2 The decision and award of a majority of the Panel shall be final and
binding on the Parties.
15.3 The Panel is authorized to award any remedy permitted by the Arbitration
Agreement or subsequent written agreement of the Parties In the absence of
explicit written agreement to the contrary, the panel is also authorized to
award any remedy or sanctions allowed by applicable law, including, but not
limited to: monetary damages; equitable relief, pre-or post-award interest costs
of arbitration; attorneys fee; and other final or interim relief.
15.4 The Award shall consist of a written statement signed by a majority of the
Panel setting forth the disposition of the claims and the relief, if any,
awarded. If both parties request a written rationale for the Panel's Award, the
Panel shall provide one. If either Party objects to a written rationale, the
Panel shall not issue one.
15.5 The prohibition on ex-parte communications shall remain in effect until the
earlier of the Parties waiving their right to challenge the Award, the
expiration of the time period during which a challenge could be filed without
any such challenge being filed, or the conclusion of any challenge to the Award.
15.5 The prohibition on ex-parte communications shall remain in effect until the
earlier of the Parties waiving their right to challenge the Award, the
expiration of the time period during which a challenge could be filed without
any such challenge being filed, or the conclusion of any challenge to the Award.
16.1 ALTERNATIVE STREAMLINED PROCEDURES
16.1 The purpose of the streamlined Procedures in this article is to provide a
fair, fast and efficient alternative process for resolving disputes in which the
Parties agree that streamlined Procedures are appropriate. Parties are
encouraged to discuss the use of these Procedures prior to communicating a
demand for arbitration. By agreement, the Parties may want to expand these
Procedures to accommodate the unique needs of their particular dispute.
Note to 16.1 - It is contemplated that the needs of a particular arbitration may
require a one-day hearing, the voluntary exchange of documents agreed to by the
Parties, or the testimony of witnesses. This article is designed to be the basic
streamlined process which can form the structure for the Parties to add to as
they deem appropriate to the particular dispute. The Parties are encouraged to
discuss these added features and reach agreement prior to invoking the use of
this article.
16.2 A request for arbitration utilizing these streamlined Procedures may be
made by the Petitioner in its written demand for arbitration pursuant to P. 4.1.
When a request for streamlined arbitration is made by the Petitioner, the
Respondent must agree, in writing, no later than 7 days from the date of
receiving such request. Failure of the Respondent to reply within 7 days shall
be deemed to be a rejection of the request, and the arbitration will proceed in
accordance with the provisions of articles 1 through 15 of these Procedures.
16.3 Upon receipt of a demand for arbitration, the Respondent may request the
use of streamlined Procedures, in writing, no later than 7 days after receipt of
the arbitration demand from the Petitioner. The Petitioner must agree, in
writing, no later than 7 days from the date that the Petitioner receives such
request. failure of the Petitioner to respond within 7 days shall be deemed a
rejection of the request, and the arbitration will proceed in accordance with
the provisions of articles 1 through 15 of these Procedures.
16.4 The Panel shall consist of one Disinterested, neutral arbitrator, selected
by agreement of the Parties. If the Parties cannot agree on an appointment
within 30 days of the agreement to proceed by these streamlined Procedures, the
Parties shall default to the use of articles I through 1 5 of these Procedures A
in lieu of proceeding pursuant to this article.
16.5 Ex-parte communication with the neutral arbitrator is prohibited.
16.6 Within 21 days from the date the neutral arbitrator is agreed upon, the
Parties and the neutral arbitrator will conduct an or, organizational meeting by
telephone conference call to familiarize the neutral arbitrator with the issues
in dispute and to agree on a schedule for submission of briefs.
16.7 There shall be no discovery, unless the Parties agree otherwise.
16.8 The dispute shall be submitted to the neutral arbitrator on briefs and
documentary evidence only, unless the Parties agree otherwise.
16.9 The neutral arbitrator shall render its decision in accordance with the
provisions of article 15 of these Procedures.
17. SEVERABILITY
17.1 If any provision of these Procedures, or amendments
thereto, is held invalid, such invalidity shall not
affect other provisions or applications of these
Procedures which can be given effect without the
invalid application or provision, and to this end
each provision of these Procedures, and any
amendments thereto, is severable.
Members of the Reinsurance Dispute Resolution Task Force
Xxxxx Xxxxxx Xxxxxx
Navigant Consulting, Inc.
Xxxx X. Xxxxxxx
Commercial Risk Re-Insurance Company
Xxxxx X. Xxxxxxxxx
CNA
Xxxxxxx X. X. Xxxxx
KWELM Management Services, Ltd.
Xxxx Xxxxx
San Francisco Re/Fireman's Fund
Xxxxxxx XxXxxx
PMA Reinsurance Corporation
Xxxx Xxxxxxx
AXA Reinsurance Company
Xxxxx X Xxxxxx
Former President of CIGNA Property/Casualty
Xxxx X. Xxxxxxxx
The Hartford
Xxxxx X. Xxxx
Reinsurance Association of America
Xxxxxx X. Xxxx
RMH Consulting
Members of the Reinsurance Dispute Resolution Task force (cont-d)
Xxxxxx X. Xxxxx
Syhia Kamisky
Xxxxxxx Xxxxx
Equitas
Xxxx Xxxxxxx
American International Group, Inc.
Xxxxxxxx Xxxxxxx
ACE USA
Xxxxxx X. Xxxxxx
Zurich-U.S.
Xxxxxxx Xxxxxxxxxx
American Insurance Association
Xxxxxx Xxxxxxx
Honzon Management Group, LLC
Xxxxxxxxx X. Xxxxxx
American lnternational Group, Inc.
Xxxxxx X. Xxx
General Reinsurance Corporation
Xxxxxx X. Xxxxxx
Brokers & Reinsurance Markets Association
Xxxxx X. Xxxxxx
Members of the Reinsurance Dispute Resolution Task Force (cont'd)
Xxxxx X. Xxxx
Signet Star Reinsurance Company
Xxxxxxx X. Speed
American Re-Insurance Company
Xxxxx Xxxxxxxxx
Allstate Insurance Company
Members of the Reinsurance Dispute Resolution Task Force (cont'd)
Xxxxx X. Xxxx
Signet Star Reinsurance Company
Xxxxxxx X. Speed
American Re-Insurance Company
Xxxxx Xxxxxxxxx
Allstate Insurance Company
