MULTIPLE LINE QUOTA SHARE REINSURANCE AGREEMENT
Exhibit 10.8
MULTIPLE LINE QUOTA SHARE REINSURANCE AGREEMENT
NO. PORl147218
EFFECTIVE: April 1,2014
between
HOMEOWNERS OF AMERICA INSURANCE COMPANY
Irving, Texas
and
SWISS REINSURANCE AMERICA CORPORATION
Armonk, New York
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ARTICLE
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CONTENTS
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PAGE
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PREAMBLE
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1
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I
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BUSINESS COVERED
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1
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II
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EFFECTIVE DATE AND TERMINATION
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2
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III
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TERRITORY
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3
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IV
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RETENTION
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3
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V
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DEFINITIONS
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4
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VI
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INURING REINSURANCE
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8
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VII
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EXCLUSIONS
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9
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VIII
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SPECIAL ACCEPTANCE
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15
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IX
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INTERNATIONAL TRADE CONTROLS AND ECONOMIC SANCTIONS
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15
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X
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REINSURANCE PREMIUM
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15
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XI
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SLIDING SCALE COMMISSION
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15
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XII
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LOSSES, LOSS ADJUSTMENT EXPENSES AND SALVAGES
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16
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XIII
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TERRORISM EXCESS RECOVERY
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16
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XIV
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REPORTS AND REMITTANCES
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17
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XV
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INDIVIDUAL CLAIM REPORTING
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21
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XVI
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ACCESS TO RECORDS
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22
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XVII
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TAXES
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22
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XVIII
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OFFSET
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22
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XIX
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DISPUTE RESOLUTION
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23
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XX
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INSOLVENCY
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24
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XXI
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SERVICING
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25
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XXII
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AMENDEMENTS
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26
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SIGNATURES
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26
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ATTACHMENTS: INSOLVENCY FUNDS EXCLUSION CLAUSE
POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE TOTAL INSURED VALUE EXCLUSION CLAUSE
POLLUTION AND SEEPAGE EXCLUSION CLAUSE
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE - U.S.A.
NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE - NO.4
POLLUTION LIABILITY EXCLUSION CLAUSE - REINSURANCE NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY -
REINSURANCE - U.S.A.
MULTIPLE LINE QUOTA SHARE
REINSURANCE AGREEMENT
NO. PORl147218
(hereinafter referred to as the "Agreement")
between
HOMEOWNERS OF AMERICA INSURANCE COMPANY
Irving, Texas
(hereinafter referred to as the "Company")
and
SWISS REINSURANCE AMERICA CORPORATION
Armonk, New York
(hereinafter referred to as the "Reinsurer")
ARTICLE I - BUSINESS COVERED
| A. | By this Agreement the Company obligates itself to cede to the Reinsurer and the Reinsurer obligates itself to accept from the Company a 10% Quota Share participation of the Company's Ultimate Net Liability for Policies in force as of April 1, 2014, and new and renewal Policies becoming effective on or after said date as respects losses occurring on or after April 1, 2014. This Quota Share is subject to the maximum cession limits set forth below: |
1. Property Business
$200,000 each risk (10% share of the Company's Ultimate Net Liability of $2,000,000), however, in no event shall the Reinsurer's liability from all risks in each Loss Occurrence exceed $400,000 (10% share of the Company's Ultimate Net Liability of $4,000,000. Notwithstanding the above, as respects all Terrorism events, the Reinsurer shall never be liable for more than $400,000 in any calendar year.
2. Casualty Business
$100,000 each Policy each Loss Occurrence (10% share of the Company's Ultimate Net Liability of $1,000,000). Notwithstanding the above, as respects all Terrorism events, the Reinsurer shall never be liable for more than $400,000 in any calendar year.
3. Subparagraphs 1. and 2. of this Article notwithstanding, the liability of the Reinsurer as respects Loss Occurrences for both Property and Casualty business combined shall never exceed 150% of the ceded earned premium for the term of this Agreement (prior to commission allowed hereon).
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B. Any loss arising under this Agreement with respect to 80% of Loss In Excess of Policy Limits and 80% of Extra Contractual Obligations, as defined herein, shall be recovered in the same proportion as the contractual loss recoverable hereunder provided such contractual loss plus Loss In Excess of Policy Limits or such contractual loss plus Extra Contractual Obligations shall never exceed the maximum cession limit for each Loss Occurrence set forth under Paragraph A. above.
| C. | This Agreement is solely between the Company and the Reinsurer, and nothing contained in this Agreement shall create any obligations or establish any rights against the Reinsurer in favor of any person or entity not a party hereto. |
| D. | The performance of obligations by both parties under this Agreement shall be in accordance with a fiduciary standard of good faith and fair dealing. |
| E. | Under this Agreement, the indemnity for reinsured loss applies only to the followingProperty and Casualty Business except as excluded under Article VII - Exclusions of this Agreement. |
PROPERTY BUSINESS
NAIC
CODE: LINES OF BUSINESS:
01 Fire
02 Allied Lines
04 Homeowners (Section I only)
09 Inland Marine
CASUALTY BUSINESS
CLASSES OF INSURANCE
Liability Other Than Automobile:
Bodily Injury Liability, Property Damage Liability, Personal Injury Liability, and Medical Payments Coverage when written as part of a Homeowners (Section II only), Dwelling Fire Liability or Comprehensive Personal Liability Policy.
ARTICLE II - EFFECTIVE DATE AND TERMINATION
A. This Agreement shall become effective 12:01 a.m., Central Standard Time, April
1, 2014, and shall remain in full force until 12:01 a.m., Central Standard Time, April 1, 2015.
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B. Upon termination of this Agreement, the Company shall have the option of continuing or terminating the liability in force at the date of termination as set forth below. The Company may exercise such option provided written notice of the Company's election is given by certified mail or by a courier service producing evidence of receipt by the receiving party, to the Reinsurer prior to the date of termination. If the Company does not choose to exercise its option prior to the date of termination, such option shall revert to the Reinsurer.
| 1. | The Reinsurer shall be liable for losses occurring subsequent to the date of termination for all Policies covered hereunder and in force at the date of termination of this Agreement until their natural expiry, cancellation or next anniversary of such business, whichever first occurs; but in no case shall this reinsurance be extended for longer than 12 months, after the termination date. At such time, the Reinsurer shall return to the Company the unearned premiums, less commissions applicable, for the unexpired periods. |
| 2. | All reinsurance hereunder shall be automatically cancelled as of the date of termination and the Reinsurer shall be released of all liability as respects losses occurring subsequent to the date of termination. The Reinsurer shall return to the Company the unearned premiums on the business in force hereunder at the date of termination, less the commission allowed thereon. |
ARTICLE III - TERRITORY
A. As respects Property Business, this Agreement applies to risks located the United States of America, its territories and possessions , except that with respect to Inland Marine and Multiple Peril Policies covered hereunder, the territorial limits of this Agreement shall be those of the original Policies when such Policies are written to cover risks primarily located in the United States of America, its territories and possessions.
| B. | As respects Casualty Business, this Agreement applies to Policies issued by the Company within the United States of America, its territories and possessions, and shall apply to losses covered hereunder wherever occurring. |
ARTICLE IV - RETENTION
The Company warrants that it shall retain net for its own account and not reinsure in any way 10% of its Ultimate Net Liability.
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ARTICLE V - DEFINITIONS
B. DECLARATORYJUDGMENT EXPENSES
"Declaratory Judgment Expenses" shall mean all legal expenses, incurred in the representation of the Company in litigation brought to determine the Company's defense and/or indemnification obligations that are allocable to any specific claim or loss applicable to Policies subject to this Agreement. In addition, the Company shall promptly notify the Reinsurer of any Declaratory Judgment Expenses subject to this Agreement.
C. EXTRA CONTRACTUAL OBLIGATIONS
1. "Extra Contractual Obligations" are defined as those liabilities not covered under any other provision of this Agreement and which arise from the 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 ▇▇▇▇▇▇.▇▇▇ 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.
2. The date on which an Extra Contractual Obligation is incurred by the Company shall be deemed, in all circumstances, to be the date of the original accident, casualty, disaster or loss occurrence.
| 3. | However, coverage hereunder as respects Extra Contractual Obligations 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. |
| 4. | Recoveries, collectibles or retention from any other form of insurance or reinsurance including deductibles or self-insured retention which protect the Company against Extra Contractual Obligations, whether collectible or not, shall inure to the benefit of the Reinsurer and shall be deducted from the total amount of Extra Contractual Obligations for purposes of determining the loss hereunder. |
5. If any provision of this paragraph shall be rendered illegal or unenforceable by the laws, regulations or public policy of any jurisdiction, such provision shall be considered void in such jurisdiction, but this shall not affect the validity or enforceability of any other provision of this Article or the enforceability of such provision in any other jurisdiction.
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D. LOSS ADJUSTMENT EXPENSES
"Loss Adjustment Expenses" shall mean all expenses paid by the Company in connection with the investigation, settlement. defense or litigation, including court costs and post judgment interest. of any claim or loss which is the subject matter of Policies covered under this Agreement and shall include Declaratory Judgment Expenses. However, "Loss Adjustment Expenses" shall not include the salaries and expenses of Company employees, office expenses, and other overhead expenses.
E. LOSS IN EXCESS OF POLICY LIMITS
1. "Loss in Excess of Policy Limits" is defined as loss in excess of the limit of the original Policy, such loss in excess of the limit having been incurred because of 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.
2. However, this paragraph shall not apply where the loss has been incurred due to fraud by 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.
3. For the purposes of this paragraph, the word "loss" shall mean any amounts which the Company would have been contractually liable to pay had it not been for the limit of the original Policy.
| 4. | With respect to coverage provided under this paragraph, recoveries from any insurance or reinsurance other than this Agreement, whether collectible or not, shall be deducted to arrive at the amount of the Company's Ultimate Net Liability. |
F. LOSS OCCURRENCE
As respects Property Business covered under this Agreement:
1. The term "Loss Occurrence" shall mean the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event which occurs within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another. However, the duration and extent of any one Loss Occurrence shall be limited to all individual losses sustained by the Company occurring during any period of 168 consecutive hours arising out of and directly
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occasioned by the same event except that the term "Loss Occurrence" shall be further defined as follows:
| a. | As regards windstorm, hail, tornado. hurricane, cyclone. including ensuing collapse and water damage, all individual losses sustained by the Company occurring during any period of 72 consecutive hours arising out of and directly occasioned by the same event. However, the event need not be limited to one state or province or states or provinces contiguous thereto. |
b. As regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Company, occurring during any period of 72 consecutive hours within the area of one municipality or county and the municipalities or counties contiguous thereto arising out of and directly occasioned by the same event. The maximum duration of
72 consecutive hours may be extended in respect of individual losses which occur beyond such 72 consecutive hours during the continued occupation of an assured's premises by strikers, provided such occupation commenced during the aforesaid period.
c. As regards earthquake (the epicentre of which need not necessarily be within the territorial confines referred to in the opening paragraph of this Article) and fire following directly occasioned by the earthquake, only those individual fire losses which commence during the period of 168 consecutive hours may be included in the Company's Loss Occurrence.
| d. | As regards Freeze, only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting of frozen pipes and tanks) may be included in the Company's Loss Occurrence. |
e. As regards firestorms, brush fires and any other fires or series of fires, irrespective of origin (except as provided in subparagraphs b. and c. above), which spread through trees, grassland or other vegetation, all individual losses sustained by the Company which commence during any period of 168 consecutive hours within a
150-mile radius of anyone fixed point selected by the Company may be included in the Company's "Loss Occurrence." However, an individual loss subject to this subparagraph cannot be included
in more than one "Loss Occurrence."
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f. As regards Terrorism, all individual losses sustained by the Company occurring during any period of 72 consecutive hours arising out of and directly occasioned by the same event. Should such an event of Terrorism give rise to other perils which, in an unbroken chain of causation, have occasioned the losses, the cause of the losses is understood to be that event of Terrorism.
2. For all Loss Occurrences the Company may choose the date and time when any such period of consecutive hours commences provided that it is not earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss and provided that only one such period of 168 consecutive hours shall apply with respect to one event except tor those Loss Occurrences referred to in a., b. and f. above, where only one such period of 72 consecutive hours shall apply with respect to one event, regardless of the duration of the event.
| 3. | No individual losses occasioned by an event that would be covered by 72 hours clauses may be included in any Loss Occurrence claimed under the |
168 hours provision.
As respects Casualty Business covered under this Agreement:
"Loss Occurrence" shall mean any accident or occurrence or series of accidents or occurrences arising out of anyone event and happening within the term and scope of this Agreement.
▇. ▇▇▇▇▇ PREMIUMS WRITTEN
"Gross Premiums Written" shall mean gross and additional premiums less return premiums.
H. POLICIES
"Policies" shall mean each of the Company's binders, policies and contracts of insurance on the business covered hereunder.
I. RISK
The Company shall be the sole judge of what constitutes one risk provided, however, that:
1. A risk shall never be less than all insurable values within exterior walls and under one roof regardless of fire divisions, the number of Policies involved, and whether there is a single, multiple or unrelated named
insureds involved in such risk.
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| 2. | When two or more buildings are situated at the same general location, the Company shall identify on its records at the time of acceptance by the Company, those individual buildings and all insurable values contained therein that are considered to constitute each risk. If such identification is not made, each building and all insurable values contained therein shall be considered to be a separate risk. |
| 3. | A risk shall be determined from the standpoint of the predominant peril and such peril shall be noted in the Company's records. |
J. TERRORISM
"Terrorism" shall mean:
| 1. | Any actual or threatened violent act or act harmful to human life, tangible or intangible property or infrastructure directed towards or having the effect of (i) influencing or protesting against any de jure or de facto government or policy thereof, (ii) intimidating, coercing or putting in fear a civilian population or section thereof for the purpose of establishing or advancing a specific ideological, religious or political system of thought, perpetrated by a specific individual or group directly or indirectly through agents acting on behalf of said individual or group or (iii) retaliating against any country for direct or vicarious support by that country of any other government or political system. |
| 2. | Any act declared pursuant to the Terrorism Risk Insurance Act of 2002, as amended, shall also be considered Terrorism. |
K. ULTIMATE NET LIABILITY
"Ultimate Net Liability" shall mean the remaining portion of the Company's gross liability on each Policy reinsured under this Agreement after deducting recoveries from all other reinsurance, whether specific or general and whether collectible or not.
ARTICLE VI - INURING REINSURANCE
The Company has the right to purchase per risk excess of loss reinsurance on a facultative or treaty basis during the Term, and recoveries from any such contracts shall inure to the benefit of this agreement. All reinsurance other than the reinsurance set
forth in this Article shall inure to the sole benefit of the Company.
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ARTICLE VII - EXCLUSIONS
| I. | AS RESPECTSPROPERTYBUSINESSCOVEREDUNDERTHIS AGREEMENT THIS AGREEMENTDOESNOT COVER: |
A. THE FOLLOWINGGENERALCATEGORIES
1. All lines of Business not specifically listed in Article I - Business
Covered.
2. Policies issued with a deductible of $100,000 or more; provided this exclusion shall not apply to Policies which customarily provide a percentage deductible on the perils of earthquake or windstorm.
3. Reinsurance assumed.
4. Ex-gratia Payments.
5. Loss or damage occasioned by war, invasion, revolution, bombardment. hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, martial law, or confiscation by order of any government or public authority, but not excluding loss or damage which would be covered under a standard form of Policy containing a standard war exclusion clause.
6. Insolvency Funds as per the attached Insolvency Funds Exclusion
Clause, which is made part of this Agreement.
| 7. | Pool, Syndicate and Association business as per the attached Pools, Associations and Syndicates Exclusion Clause, which is made part of this Agreement. |
8. Risks where the Total Insured Value, per risk, exceeds the figure specified as per the attached Total Insured Value Exclusion
Clause, which is made part of this Agreement.
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| 9. | Loss resulting from damage to overhead transmission and distribution lines, including supporting structures and anything attached thereto, of any public or private utility company, cable television or telecommunication company of any kind. This exclusion shall not apply to such overhead transmission and distribution lines, including supporting structures and anything attached thereto located on the premises of any policyholder or within 1,000 feet thereof. Nor shall this exclusion apply to utility service interruption or contingent business interruption losses for |
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any policyholder, unless such policyholder is a public or private utility company, cable television or telecommunication company of any kind.
10. Any statutory or regulatory fine or penalty imposed upon the
Company on account of any unfair trade or claim practice.
11. Any new business written by the Company's agents on or after March 1, 2014, and subsequent renewal of such business. for which US RE Corporation is the intermediary. that provides coverage in Tiers 1. 2 or 3; and any new business written by the Company on or after March 1. 2014, and 'subsequent renewal of such business. that provides coverage in zip codes: 77346.
77449, 77469. 77479 or 77494; all as classified by the
Company as the "Second Gulf Program."
B. THE FOLLOWING CLASSES OF BUSINESS AND TYPES OF RISKS
1. Mortgage Impairment.
2. Growing and/or standing crops.
3. Mortality and Health covering birds. animals or fish.
4. All onshore and offshore gas and oil drilling rigs.
5. Petrochemical operations engaged in the production, refining or upgrading of petroleum or petroleum derivatives or natural gas.
6. Satellites.
7. All rail road business.
8. As respects Inland Marine business:
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a.
b.
c.
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Registered Mail and Armored Car Policies.
Jeweler's Block Policies.
Furrier's Customers Policies.
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d.
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Rolling Stock.
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e.
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Parcel Post when written to cover banks and financial institutions.
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f.
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Commercial Negative Film Insurance.
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g. Garment Contractors Policies.
h. Mining Equipment while underground.
i. Radio and Television Broadcasting Towers.
j. Motor Truck Cargo Insurance written for common carriers operating beyond a radius of 200 miles.
C. THE FOLLOWING PERILS
1. Flood and/or Earthquake when written on a stand alone basis.
2. Difference in Conditions, however styled.
3. Pollution and Seepage as per the attached Pollution and Seepage
Exclusion Clause which is made part of this Agreement.
4. Nuclear Incident Exclusion Clauses which are attached and made part of this Agreement:
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a.
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Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance - U.S.A.
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b.
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Nuclear Incident Exclusion Clause - Reinsurance - No.4.
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5.
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a.
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Loss, damage or expense of whatsoever nature caused directly or indirectly by any of the following, regardless of
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any other cause or event contributing concurrently or in
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any other sequence to the loss: nuclear reaction or
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radiation, or radioactive contamination, however caused.
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b.
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However, if nuclear reaction or radiation, or radioactive
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contamination results in fire it is specifically agreed
herewith that this Agreement will pay for such fire loss or damage subject to all of the terms, conditions and limitations of this Agreement.
c. This exclusion shall not apply to loss, damage or expense originating from and occurring at risks using radioactive isotopes in any form where the nuclear exposure is not
considered by the Company to be the primary hazard.
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6. Loss, damage or expense of whatsoever nature arising directly or indirectly from fungi, bacteria, including mold or mildew, and/or any mycotoxins, spores, scents or byproducts produced or released by fungi, regardless of any other cause, event, material, product and/or building component that contributed concurrently or in any sequence to that injury or damage. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.
| 7. | Loss, damage or expense of whatsoever nature directly or indirectly caused by, contributed by, resulting from, arising out of or in connection with biological or chemical substances, pollution, contamination, or the threat thereof, regardless of any other cause or event contributing concurrently or in any other sequence to the loss, and/or fire following therefrom. |
D. In the event the Company is inadvertently bound on any risk which is excluded under Paragraph B, of Part I of this Article, the reinsurance provided under this Agreement shall apply to such risk until discovery by the Company within its Home Office of the existence of such risk and for
30 days thereafter, and shall then cease unless within the 30 day period,
the Company has received from the Reinsurer written notice of its approval of such risk.
| II. | AS RESPECTS CASUALTY BUSINESS COVERED UNDER THIS AGREEMENT THIS AGREEMENT DOES NOT COVER: |
A. THE FOLLOWING GENERAL CATEGORIES
1 Ex-gratia payments.
2. Risks subject to a deductible or a self-insured retention excess of $25,000.
3. Loss or damage caused directly or indirectly by: (a) enemy attack by armed forces including action taken by military, naval or air forces in resisting an actual or an immediately impending enemy attack; (b) invasion; (c) insurrection; (d) rebellion; (e) revolution; (f) intervention; (g) civil war; and (h) usurped power.
4. Reinsurance assumed by the Company.
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5. Business derived from any Pool, Association, including Joint Underwriting Association, Syndicate, Exchange, Plan, Fund or other facility directly as a member, subscriber or participant, or indirectly by way of reinsurance or assessments; provided this exclusion shall not apply to Automobile or Workers Compensation assigned risks which may be currently or subsequently covered hereunder.
6. Pollution Liability as per the attached Pollution Liability Exclusion
Clause - Reinsurance.
7. Insolvency Funds as per the attached Insolvency Funds Exclusion
Clause.
8. Nuclear Incident Exclusion Clauses which are attached and made part of this Agreement:
a. Nuclear Incident Exclusion Clause - Liability - Reinsurance - U.S.A.
b. Nuclear Incident Exclusion Clause - Reinsurance - NO.4.
9. Any actual or alleged liability whatsoever for any claim or claims in respect of loss or losses, directly or indirectly arising out of, resulting from, or in consequence of asbestos, in whatever form or quantity.
10. Any statutory or regulatory fine or penalty imposed upon the Company on account of any unfair trade or claim practice.
11. Any liability, loss, cost or expense caused by any act of Terrorism that is directly or indirectly caused by, contributed to by, resulting from, arising out of or in connection with the use or release, or threat thereof, of any nuclear weapon or device or chemical, biological or radiological agent, regardless of any other cause or event contributing concurrently or in any other sequence to the loss.
12. Any new business written by the Company's agents on or after March 1, 2014, and subsequent renewal of such business, for which US RE Corporation is the intermediary, that provides coverage in Tiers 1, 2 or 3; and any new business written by the Company on or after March 1, 2014, and subsequent renewal of such business, that provides coverage in zip codes: 77346, 77449, 77469, 77479 or 77494; all as classified by the Company as the "Second Gulf Program."
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B. THE FOLLOWING INSURANCE COVERAGES
1. All Lines of Business not specifically listed in Article I - Business
Covered.
2. Fiduciary Liability.
3. Fidelity and Surety.
4. Credit and Financial Guarantee.
5. Securities and Exchange Liability.
6. Retroactive coverage.
7. Personal and Commercial Excess or Umbrella Liability.
8. Malpractice or Professional Liability except incidental Malpractice
Liability.
9. Errors and Omissions Liability.
10. Directors' and Officers' Liability.
11. Advertisers', Broadcasters' and Telecasters' Liability as respects Personal Injury Liability except as provided under Commercial Package Policies or Commercial General Liability Coverage Forms.
12. Liquor Law Liability except Host Liquor Law Liability.
13. Kidnap, Extortion and ▇▇▇▇▇▇ Liability.
14. Boiler and Machinery Insurance.
15. Protection and Indemnity (Ocean Marine).
C. THE FOLLOWINGAS RESPECTS LIABILITY OTHER THAN AUTOMOBILE
1. Ownership, operation or use of vessels exceeding 50 feet in length.
| 2. | Ownership, maintenance or use of any airport or aircraft, including fueling, or any device or machine intended for and/or aiding in the achievement of atmospheric flight, projection or |
orbit.
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ARTICLE VIII - SPECIAL ACCEPTANCE
Risks and/or Policies which are beyond the terms, conditions or limitations of this Agreement may be submitted to the Reinsurer for special acceptance hereunder; and such risks and/or Policies, if accepted in writing by the Reinsurer, shall be subject to all of the terms, conditions and limitations of this Agreement, except as modified by the special acceptance. Premiums and losses derived from any special acceptance shall be included with other data for rating purposes under this Agreement.
ARTICLE IX -INTERNATIONAL TRADE CONTROLS AND ECONOMIC SANCTIONS
No Reinsurer shall be deemed to provide cover and no Reinsurer shall be liable to pay any claim or pay any benefit hereunder to the extent that the provision of such cover, payment of such claim or provision of such benefit would expose that Reinsurer to any sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of any jurisdiction applicable to that Reinsurer.
ARTICLE X - REINSURANCE PREMIUM
| A. | The Company shall cede to the Reinsurer 10% of the Company's gross unearned premiums on its Ultimate Net Liability in force as of April 1, 2014 on the business covered hereunder. |
B. The Company shall cede to the Reinsurer 10% of the Company's Gross Premiums Written applicable to new and renewal Policies becoming effective on or after April 1, 2014, with respect to its Ultimate Net Liability on the business covered hereunder.
| C. | The following percentages of the Company's premium shall be allocated to the business covered under this Agreement: |
Homeowners: Section 1-95% Section II - 5%
Dwelling Fire: Section I - 90% Section II - 10%
ARTICLE XI - COMMISSION
| A. | The Reinsurer shall make a commission allowance of 49% to the Company's Gross Premiums Written ceded hereunder. The Company shall debit the Reinsurer with the commission allowance in the monthly accounts. |
B. Such commission allowance includes provision for all brokerage and commission. premium taxes of all kinds, all board, bureau and exchange assessments, and any other expenses whatsoever except Loss Adjustment
Expenses.
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ARTICLE XII - LOSSES, LOSS ADJUSTMENT EXPENSES AND SALVAGES
| A. | The Reinsurer shall pay its pro rata share of losses including prejudgment interest paid by the Company arising under Policies covered under this Agreement, and the Reinsurer shall benefit proportionately in all recoveries, including salvage and subrogation. |
| B. | The Reinsurer shall pay its pro rata share of Loss Adjustment Expenses paid by the Company. |
| C. | The Company shall have the responsibility to investigate, defend or negotiate settlements of all claims and lawsuits related to Policies written by the Company and reinsured under this Agreement. The Reinsurer, at its own expense, may associate with the Company in the defense of any claim, suit or other proceeding which involves or is likely to involve the reinsurance provided under this Agreement, and the Company shall cooperate in every respect in the defense of any such claim, suit or proceeding. |
ARTICLE XIII - TERRORISM EXCESS RECOVERY
A. For purposes of this Article:
1. "Act" shall mean the Terrorism Risk Insurance Act of 2002, any amendments thereto and any regulations promulgated thereunder.
| 2. | "Affiliate," "Insured Losses," and "Program Year" shall have the meanings provided in the Act. |
3. "Company" shall include the Company and all affiliates.
B. This reinsurance shall not apply to any fines, civil penalties or surcharges assessed pursuant to the Act.
C. To the extent that the Company allocates Insured Losses and/or federal assistance under the Act among affiliates, claims, contracts or otherwise in any manner which impacts the reinsurance provided hereunder, the Company shall apply a reasonable allocation method acceptable to the Reinsurer.
D. To the extent that an Insured Loss is otherwise payable hereunder, the reinsurance provided by this Agreement shall apply only to the portion of liability, loss, cost and/or expense retained by the Company net of any federal assistance pursuant to the Act. For each Program Year, the liability of the Reinsurer for Insured Losses under this Agreement shall be reduced by the ratio
that the financial assistance under the Act allocated to Policies subject to this
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Agreement bears to the Company's total Insured Losses subject to this Agreement. If the Company does not make such allocation, the liability of the Reinsurer for Insured Losses in any Program Year under this Agreement shall be reduced by the ratio that the financial assistance available to the Company under the Act for that Program Year bears to the Company's total Insured Losses for the same Program Year.
E. The parties recognize that. for any Program Year, the Reinsurer may without waiver of the foregoing Paragraphs make payments for Insured Losses which, together with available financial assistance under the Act and the Company retentions and/or deductibles hereunder, exceed the Company's Insured Losses. In such event, the Reinsurer's proportional share of all such excess recovery (hereafter "Reinsurer's Excess Share") shall inure to the benefit of the Reinsurer. All excess recovery described in this Paragraph shall be allocated to the Reinsurer and the Company in proportion to the respective liability of each for Insured Losses, net of federal assistance under the Act, salvage, subrogation and other similar recoveries, as applicable.
F. In the event of a Reinsurer's Excess Share, the Company shall:
1. Promptly pay the Reinsurer's Excess Share to the Reinsurer; or
2. Upon request of the Reinsurer at any time and at the Reinsurer's sole discretion, instead assign to the Reinsurer its rights to recover directly from the federal government any portion of Reinsurer's Excess Share not already paid to the Reinsurer. The Company shall cooperate with and assist the Reinsurer, at its own expense, to the extent reasonably necessary for the Reinsurer to exercise those rights. If the Reinsurer is unable, for any reason, to exercise any right assigned to it by the Company pursuant to this Article, the Company shall pay the Reinsurer's Excess Share to the Reinsurer as if no assignment had taken place to the extent that the Company has not been deemed to have forfeited the right to financial assistance under the Act by virtue of the attempted assignment.
| G. | In the event of an Insured Loss, the Company shall provide the Reinsurer with a monthly report detailing claim settlement activities and financial assistance under the Act. Calculations for each Program Year shall continue to be made until the settlement of all Insured Losses covered hereunder. |
ARTICLE XIV - REPORTS AND REMITTANCES
| A. | The Company shall provide the Reinsurer with a monthly account as well as quarterly and annual reports and any bordereaux requested by the Reinsurer all in accordance with the provisions set forth in Paragraphs C., E., F., H. and I. below. |
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B. Portfolio Assumption - Within 60 days after April 1, 2014 , the Company shall pay to the Reinsurer the Reinsurer's pro rata share of the Company's unearned premium reserve segregated by Line of Business on the business in force as of said date.
| C. | Monthly Account - Within 30 days after the close of each month the Company shall forward a monthly account summarizing the following transactions under this Agreement during such month: |
1. Gross Premiums Written ceded segregated by Line of Business;
2. Commissions;
3. Loss and Loss Adjustment Expenses paid less recoveries, including salvage and subrogation, segregated by Line of Business, by year of loss.
The balance due either party shall be paid within 45 days after the close of each
month for the transactions during such month.
D. In respect of Paragraph C. above:
1. All Monthly Account Statements shall be sent to the Reinsurer at:
a. E-Mail/Word, Excel, PDF, or TIF Formats, or other scanned documents:
▇▇▇▇▇▇_▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇, or b. Standard Mail:
Swiss Reinsurance America Corporation
Technical Accounting Department
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2. All checks and supporting documentation shall be sent to the Reinsurer through one of the options set forth below and shall identify the
applicable Reinsurer Agreement Number(s):
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a. WIRE TRANSFER
(i) All wires shall be sent to: The Bank of New York
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Account Name: Swiss Reinsurance America Corporation
Account Number: 8900489197
ABA Number: ▇▇▇▇▇▇▇▇▇
SWIFT: ▇▇▇▇▇▇▇▇
| (ii) | All supporting documentation shall be sent to: Swiss Reinsurance America Corporation |
Technical Accounting Department
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
b. COURIER OR OVERNIGHT CARRIER
Both checks and supporting documentation shall be sent to: Swiss Reinsurance America Corporation ▇/▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, PA 15262-0001
Attn: Wholesale Lockbox
c. LOCK BOX
Both checks and supporting documentation shall be sent to:
Swiss Re
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
| E. | Premium Bordereau - Within 30 days after the Reinsurer's request, if any, the Company shall submit a premium bordereau to the Reinsurer segregated by underwritingyear, the following information as respects each Policy covered under this Agreement: |
1. Name of Insured,
2. Policy Number,
3. Effective and Expiration Dates,
4. Line of Business.
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F. Loss Bordereau - Within 30 days after the Reinsurer's request, if any, the Company shall submit a loss bordereau to the Reinsurer segregating by underwriting year of loss the following information as respects each loss covered under this Agreement:
1. Name of Insured,
2. Policy Number,
3. Policy Limits,
4. Effective and Expiration Dates,
5. Claim Number,
6. Date of Loss,
7. Line of Business,
8. Catastrophe Loss Number, if applicable.
G. The Company may make a request for immediate payment by the Reinsurer for any individual gross loss covered hereunder in excess of $1,000,000, and the Reinsurer will be credited with amounts so paid in the subsequent monthly account.
H. Quarterly Report - The Company shall furnish the Reinsurer within 30 days after the close of each calendar quarter the following information as respects the business ceded hereunder:
1. Unearned premium reserves segregated by Line of Business at the end of the calendar quarter and calculated on the actual daily basis or in accordance with the Company's methodology, as agreed.
| 2. | Estimated loss and Loss Adjustment Expense reserves outstanding at the end of the calendar quarter segregated by Line of Business, by year of loss. |
| I. | Annual Report - The Company shall furnish the Reinsurer within 45 days after the close of each calendar year a summary of the business ceded hereunder: |
1. Gross Premiums Written ceded during the year segregated by Line of Business;
2. Unearned premium reserves segregated by Line of Business;
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| 3. | Losses and Loss Adjustment Expenses paid, less recoveries, including salvage and subrogation, during the year segregated by Line of Business, by year of loss; |
| 4. | Losses and Loss Adjustment Expenses outstanding at the end of the year segregated by Line of Business, by year of loss. |
| J. | As respects Property Business covered under this Agreement, the Company shall furnish the following to the Reinsurer with respect to occurrences designated as catastrophes by the Property Claim Services: |
1. Prompt preliminary estimate of amount recoverable from the Reinsurer;
| 2. | Within 30 days after the close of each calendar quarter the amount of losses and Loss Adjustment Expenses paid, less a" recoveries, including salvage and subrogation, at the end of each calendar quarter segregated by Line of Business; |
| 3. | Within 30 days after the close of each calendar quarter the amount of losses and Loss Adjustment Expenses outstanding at the end of each calendar quarter segregated by Une of Business. |
ARTICLE XV - INDIVIDUAL CLAIM REPORTING
| A. | Notwithstanding the provisions set forth in Paragraph F. of Article XIV - Reports and Remittances, the Company shall promptly notify the Reinsurer of each claim where the sum of loss and expense paid-to-date, outstanding loss reserve and outstanding expense reserve is equal to or greater than $500,000; this |
$500,000 threshold relates to the Company's 100% gross ground-up loss
amount.
| B. | In addition, the Company shall provide the Reinsurer with the following information relative to said claim: |
1. Identifying information, including:
a. Name of Insured. b. Policy Number.
c. Claim Number.
d. Policy Limit.
e. Type of Coverage (i.e., Lines of Business and/or Classes of Insurance).
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f. Type of Policy (i.e., Primary, Excess or Umbrella).
g. Attachment Point of the Reinsured Excess or Umbrella Policy, if any.
h. A comprehensive narrative report including but not limited to a description of the facts, liability, damages, coverage, current paid to-date amounts and current reserve amounts.
| 2. | Upon the Company's learning of a material development, the Company shall promptly report such development to the Reinsurer along with the current paid-to-date amounts and the current reserve amounts. |
| 3. | Annual status reports including the current status, current paid-to-date amounts and current reserve amounts. |
4. At the conclusion of the loss, the claim settlement amount, indicating:
loss paid and expense paid.
ARTICLE XVI - ACCESS TO RECORDS
The Reinsurer or its duly authorized representatives shall have the right to examine, at the offices of the Company at a reasonable time, during the currency of this Agreement or anytime thereafter, all books and records of the Company relating to business which is the subject of this Agreement.
ARTICLEX VII - TAXES
The Company shall be liable for all taxes on premiums paid to the Reinsurer under this Agreement, except income or profit taxes of the Reinsurer, and shall indemnify and hold the Reinsurer harmless for any such taxes which the Reinsurer may become obligated to pay to any local, state or federal taxing authority.
ARTICLE XVIII - OFFSET
Each party to this Agreement together with their successors or assigns shall have and may exercise, at any time. the right to offset any balance or balances due the other (or, if more than one, any other). Such offset may include balances due under this Agreement and any other agreements heretofore or hereafter entered into between the parties regardless of whether such balances arise from premiums, losses or otherwise, and regardless of capacity of any party. whether as assuming insurer and/or ceding insurer, under the various agreements involved. provided however, that in the event of insolvency of a party hereto, offsets shall only be allowed in accordance with the provisions of Section 7427 of the Insurance Law of the State of New York to the extent
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such statute or any other applicable law, statute or regulation governing such offset shall apply.
ARTICLE XIX - DISPUTE RESOLUTION
Part I - Choice Of Law And Forum
Any dispute arising under this Agreement shall be resolved in the State of Texas, and
the laws of the State of Texas shall govern the interpretation and application of this
Agreement.
Part II - Mediation
If a dispute between the Company and the Reinsurer, arising out of the provisions of this Agreement or concerning its interpretation or validity and whether arising before or after termination of this Agreement has not been settled through negotiation, both parties agree to try in good faith to settle such dispute by nonbinding mediation, before resorting to arbitration.
Part III - Arbitration
| A. | Resolution of Disputes - As a condition precedent to any right of action arising hereunder, any dispute not resolved by mediation between the Company and the Reinsurer arising out of the provisions of this Agreement or concerning its interpretation or validity, whether arising before or after termination of this Agreement, shall be submitted to arbitration in the manner hereinafter set forth. |
B. Composition of Panel - Unless the parties agree upon a single arbitrator within
15 days after the receipt of a notice of intention to arbitrate, all disputes shall be submitted to an arbitration panel composed of two arbitrators and an umpire chosen in accordance with Paragraph C. hereof.
C. Appointment of Arbitrators - The members of the arbitration panel shall be chosen from disinterested persons with at least 10 years' experience in the insurance and reinsurance business. Unless a single arbitrator is agreed upon, the party requesting arbitration (hereinafter referred to as the "claimant") shall appoint an arbitrator and give written notice thereof by certified mail or by a courier service producing evidence of receipt by the receiving party, to the other party (hereinafter referred to as the "respondent") together with its notice of intention to arbitrate. Within 30 days after receiving such notice, the respondent shall also appoint an arbitrator and notify the claimant thereof by certified mail or by a courier service producing evidence of receipt by the receiving party. Before instituting a hearing, the two arbitrators so appointed shall choose an umpire. If, within 20 days after the appointment of the arbitrator chosen by the respondent, the two arbitrators fail to agree upon the appointment of an umpire, each of them shall nominate three individuals to
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serve as umpire, of whom the other shall decline two and the umpire shall be chosen from the remaining two by drawing lots. The name of the individual first drawn shall be the umpire.
D. Failure of Party to Appoint an Arbitrator - If the respondent fails to appoint an arbitrator within 30 days after receiving a notice of intention to arbitrate, the claimant's arbitrator shall appoint an arbitrator on behalf of the respondent, such arbitrator shall then, together with the claimant's arbitrator, choose an umpire as provided in Paragraph C. of Part III of this Article.
| E. | Submission of Dispute to Panel - Within 30 days after the notice of appointment of all arbitrators, the panel shall meet, and determine a timely period for discovery, discovery procedures and schedules for hearings. |
F. Procedure Governing Arbitration - All proceedings before the panel shall be informal and the panel shall not be bound by the formal rules of evidence. The panel shall have the power to fix all procedural rules relating to the arbitration proceeding. In reaching any decision, the panel shall give due consideration to the customs and usages of the insurance and reinsurance business.
G. Arbitration Award - The arbitration panel shall render its decision within 60 days after termination of the proceeding, which decision shall be in writing, stating the reasons therefor. The decision of the majority of the panel shall be final and binding on the parties to the proceeding. In no event, however, will the panel be authorized to award punitive, exemplary or consequential damages of whatsoever nature in connection with any arbitration proceeding concerning this Agreement.
| H. | Cost of Arbitration - Unless otherwise allocated by the panel, each party shall bear the expense of its own arbitrator and shall jointly and equally bear with the other parties the expense of the umpire and the arbitration. |
ARTICLE XX -INSOLVENCY
| A. | In the event of insolvency of the Company, the reinsurance provided by this Agreement shall be payable by the Reinsurer on the basis of the liability of the Company as respects Policies covered hereunder, without diminution because of such insolvency, directly to the Company or its liquidator, receiver, conservator or statutory successor except as provided in Sections 4118(a)(1 )(A) and 1114(c) of the New York Insurance Law. |
B. The Reinsurer shall be given written notice of the pendency of each claim or loss which may involve the reinsurance provided by this Agreement within a reasonable time after such claim or loss is filed in the insolvency proceedings. The Reinsurer shall have the right to investigate each such claim or loss and interpose, at its own expense, in the proceedings where the claim or loss is to be adjudicated, any defense which it may deem available to the Company, its
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liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to court approval, against the insolvent Company as part of the expense of liquidation to the extent of a proportionate share of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.
C. In addition to the offset provisions set forth in Article XVIII - Offset, any debts or credits, liquidated or unliquidated, in favor of or against either party on the date of the receivership or liquidation order (except where the obligation was purchased by or transferred to be used as an offset) are deemed mutual debts or credits and shall be set off with the balance only to be allowed or paid. Although such claim on the part of either party against the other may be unliquidated or undetermined in amount on the date of the entry of the receivership or liquidation order, such claim will be regarded as being in existence as of such date and any claims then in existence and held by the other party may be offset against it.
D. Nothing contained in this Article is intended to change the relationship or status of the parties to this Agreement or to enlarge upon the rights or obligations of either party hereunder except as provided herein.
ARTICLE XXI - SERVICING
| A. | AON ▇▇▇▇▇▇▇▇, Inc. is the Servicing Agent providing services for the Company in connection with this Agreement. There is no Intermediary of record for this Agreement. |
B. Payments by the Company to the Servicing Agent shall be deemed to constitute payment to the Reinsurer only to the extent that such payments are actually received by the Reinsurer. Payments by the Reinsurer shall be deemed to constitute payment to the Company to the extent that such payments are actually received by either the Servicing Agent or the Company.
C. All communications, including but not limited to, notices, reports and statements relating to this Agreement shall be deemed delivered to the Company upon receipt by the Servicing Agent or the Company, and shall be deemed delivered to the Reinsurer only upon receipt by the Reinsurer.
| D. | The servicing agent shall have no authority to negotiate or otherwise act on behalf of the reinsurer nor shall AON ▇▇▇▇▇▇▇▇, Inc. receive any remuneration |
(i.e., brokerage) from the reinsurer for providing such services
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ARTICLE XXII - AMENDMENTS
This Agreement may be amended by mutual consent of the parties expressed in an addendum; and such addendum, when executed by both parties, shall be deemed to be an integral part of this Agreement and binding on the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the. following dates:
HOMEOWNERS OF AMERICA INSURANCE COMPANY
Signature Signature
Print Name Print Name
Title Title
Date Date
SWISS REINSURANCE AMERICA CORPORATION
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SUPPLEMENT TO THE ATTACHMENTS
DEFINITION OF IDENTIFICATION TERMS USED WITHIN THE ATIACHMENTS
A. Wherever the term "Company" or "Reinsured" or "Reassured" or whatever other term is used to designate the reinsured company or companies within the various attachments to the reinsurance agreement, the term shall be understood to mean Company or Reinsured or Reassured or whatever other term is used in the attached reinsurance agreement to designate the reinsured company or companies.
B. Wherever the term "Agreement" or "Contract" or "Policy" or whatever other term is used to designate the attached reinsurance agreement within the various attachments to the reinsurance agreement, the term shall be understood to mean Agreement or Contract or Policy or whatever other term is used to designate the attached reinsurance agreement.
C. Wherever the term "Reinsurer" or "Reinsurers" or "Underwriters" or whatever other term is used to designate the reinsurer or reinsurers in the various attachments to the reinsurance agreement, the term shall be understood to mean Reinsurer or Reinsurers or Underwriters or whatever other term is used to designate the reinsuring company or companies.
INSOLVENCY FUNDS EXCLUSION CLAUSE
This Agreement excludes all 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 or from reimbursement of any person for any such liability. "Insolvency fund" includes any guaranty 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 any person of part or all of any claim, debt, charge, fee, or other obligation of an 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.
POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE
SECTION A
Excluding:
| (a) | All Business derived directly or indirectly from any Pool, Association or Syndicate which maintains its own reinsurance facilities. |
| (b) | Any Pool or Scheme (whether voluntary or mandatory) formed after March 1, 1968, for the purpose of insuring Property whether on a country-wide basis or in respect of designated areas. This Exclusion shall not apply to so-called Automobile Insurance Plans or other Pools formed to provide coverage for Automobile Physical Damage. |
SECTION B
It is agreed that business, written by the Company for the same perils, which is known at the time to be insured by or in excess of underlying amounts placed in the following Pools, Associations or Syndicates, whether by way of insurance or reinsurance is excluded hereunder:
Industrial Risk Insurers (successor to Factory Insurance Association and Oil Insurance
Association); Associated Factory Mutuals.
Any Pool, Association or Syndicate formed for the purpose of writing Oil, Gas or Petro Chemical Plants and/or Oil or Gas Drilling Rigs.
United States Aircraft Insurance Group, Canadian Aircraft Insurance Group, Associated
Aviation Underwriters, American Aviation Underwriters. SECTION B does not apply:
(a) Where the Total Insured Value over all interests of the risk in question is less than
$350,000,000.
| (b) | To interests traditionally underwritten as Inland Marine or Stock and/or Contents written on a Blanket basis. |
| (c) | To Contingent Business Interruption, except when the Company is aware that the key location is known at the time to be insured in any Pool, Association or Syndicate named above. |
| (d) | To risks as follows: Offices, Hotels, Apartments, Hospitals, Educational Establishments, Public Utilities (other than Railroad Schedules) and Builders Risks on the classes of risks specified in this subsection (d) only. |
Section C:
Nevertheless the Reinsurer specifically agrees that liability accruing to the Company from its participation in residual market mechanismsincluding but not limited to:
(1) The following so-called 'Coastal Pool": TexasWindstorm InsuranceAssociation
AND
(2) All "Fair Plan" business
for all perils otherwise protected hereunder shall not be excluded, except. however, that this reinsurance does not include any increase in such liability resulting from:
| (i) | The inability of any other participant in such "Coastal Pool" and/or "Fair Plan" and/or ResidualMarket Mechanismsto meet its liability. |
(ii) Any claim against such Coastal Pool" and/or "Fair Plan" and/or Residual Market Mechanisms,or any participant therein, including the Company,whether by way of subrogation or otherwise, brought by or on behalf of any insolvency fund (as defined in the InsolvencyFund ExclusionClauseincorporated in this Agreement).
TOTAL INSURED VALUE EXCLUSION CLAUSE
It is the mutual intention of the parties to exclude risks, other than Offices, Hotels, Apartments, Hospitals, Educational Establishments, Public Utilities (except Railroad schedules) and Builders Risk on the above classes, where at the time of the cession, the Total Insured Value over all interests exceeds $350,000,000. However, the Company shall be protected hereunder, subject to the other terms and conditions of this Agreement if subsequently to cession being made the Company becomes acquainted with the true facts of the case and discovers that the mutual intention has been inadvertently breached, the Company shall at the first opportunity, and certainly by next anniversary of the original policy, exclude the risk in question.
It is agreed that this mutual intention does not apply to Contingent Business Interruption or to interest traditionally underwritten as Inland Marine or to Stock and/or Contents written on a blanket basis except where the Company is aware that the Total Insured Value of $350,000,000
is already exceeded for buildings, machinery, equipment and direct use and occupancy at the key location.
It is understood and agreed that this Clause shall not apply hereunder where the Company writes
100% of the risk.
Notwithstanding anything contained herein to the contrary, it is the mutual intention of the parties in respect of bridges and tunnels to exclude such risks where the Total Insured Value over all interests exceeds $350,000,000.
POLLUTION AND SEEPAGE EXCLUSION CLAUSE
This Reinsurance does not apply to:
1. Pollution, seepage, contamination or environmental impairment (hereinafter collectively referred to as "pollution") insurances, however styled;
2. Loss or damage caused directly or indirectly by pollution, unless said loss or damage follows as a result of a loss caused directly by a peril covered hereunder;
3. Expenses resulting from any governmental direction or request that material present in or part of or utilized on an insured's property be removed or modified, except as provided in 5. below;
4. Expenses incurred in testing for and/or monitoring pollutants;
| 5. | Expenses incurred in removing debris, unless (A) the debris results from a loss caused directly by a peril covered hereunder, and (8) the debris to be removed is itself covered hereunder, and (C) the debris is on the insured's premises, subject. however, to a limit of $5,000 plus 25% of (i) the property damage loss, any risk, anyone location, anyone original insured, and (ii) any deductible applicable to the loss; |
6. Expensesincurred to extract pollutants from land or water at the insured's premises unless (A) the release, discharge, or dispersal of pollutants results from a loss caused directly by a peril covered hereunder, and (B) such expenses shall not exceed
$10,000;
| 7. | Loss of income due to any increased period of time required to resume operations resulting from enforcement of any law regulating the prevention, control, repair, clean-up or restoration of environmental damage; |
8. Claims under 5. and/or 6. above, unless notice thereof is given to the Companyby the insured within 180 days after the date of the loss occurrence to which such claims relate.
"Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
- 1 -
Where no pollution exclusion has been accepted or approved by an insurance regulatory authority for use in a policy that is subject to this Agreement or where a pollution exclusion that has been used in a policy is overturned. either in whole or in part. by a court having jurisdiction. there shall be no recovery for pollution under this Agreement unless said pollution loss or damage follows as a result of a loss caused directly by a peril covered hereunder.
Nothing herein shall be deemed to extend the coverage afforded by this reinsurance to property or perils specifically excluded or not covered under the terms and conditions of the original policy involved.
- 2 -
NUCLEAR INCIDENT EXCLUSION CLAUSE- PHYSICAL DAMAGE - REINSURANCE- ▇.▇▇
▇.▇▇ 1119
1. This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear Energy risks.
2. Without in any way restricting the operation of paragraph 1. of this Clause, this Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to:
I. Nuclear reactor power plants including all auxiliary property on the site, or
II. Any other nuclear reactor installation, including laboratories ▇▇▇▇▇▇.▇▇ radioactive materials in connection with reactor installations, and critical facilities as such, or
| III. | Installations for fabricating complete fuel elements or for processing substantial quantities of "special nuclear material," and for reprocessing, salvaging, chemically separating, storing or disposing of spent nuclear fuel or waste materials, or |
IV. Installations other than those listed in paragraph 2. III. above using substantial quantities of radioactive isotopes or other products of nuclear fission.
| 3. | Without in any way restricting the operation of paragraphs 1. and 2. of this Clause, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith, except that this paragraph 3. shall not operate: |
(a) where the Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or
| (b) | where the said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused. However, on and after 1st January, 1960, this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof. |
| 4. | Without in any way restricting the operation of paragraphs 1., 2. and 3. of this Clause, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against. |
| 5. | It is understood and agreed this Clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary hazard. |
▇.▇▇ 1119 -2-
6. The term "special nuclear material" shall have the meaning given to it by the Atomic Energy
Act of 1954 or by any law amendatory thereof.
| 7. | Reassured to be sole judge of what constitutes: (a) substantial quantities, and |
(b) the extent of installation, plant or site.
NOTE: - Without in any way restricting the operation of paragraph 1. hereof, it is understood and agreed that
| (a) | all policies issued by the Reassured on or before 31 st December, 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31 st December, 1960 whichever first occurs whereupon all the provisions of this Clause shall apply, |
(b) with respect to any risk located in Canada policies issued by the Reassured on or before 31 st December, 1958 shall be free from the application of the other provisions of this Clause until expiry date or 31 st December, 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.
N.M.A.1119 - 3 -
NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE - NO.4
| 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 operations of Nuclear Incident Exclusion Clauses. - Liability. - Physical Damage. - Boiler and Machinery and paragraph 1. of this Clause. it is understood and agreed that for all purposes of the reinsurance assumed by the Reinsurer from the Reinsured. all original insurance policies or contracts of the Reinsured (new. renewal and replacement) shall be deemed to include the applicable existing Nuclear Clause and/or Nuclear Exclusion Clause(s) in effect at the time and any subsequent revisions thereto as agreed upon and approved by the Insurance Industry and/or a qualified Advisory or Rating Bureau. |
POLLUTION LIABILITY EXCLUSION CLAUSE - REINSURANCE
This Reinsurance excludes:
| (1) | Any loss occurrence arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants: |
a) At or from premises owned, rented or occupied by an original assured; or
b) At or from any site or location used for the handling, storage, disposal, processing or treatment of waste; or
| c) | Which are at any time transported, handled, stored, treated, disposed of, or processed as waste; or |
d) At or from any site or location on which any original assured is performing operations:
| (i) | If the pollutants are brought on or to the site or location in connection with such operations; or |
| (ii) | If the operations are to test for, monitor, clean up, remove,contain, treat, detoxify or neutralize the pollutants. |
(2) Any liability, loss, cost or expensearising out of any governmentaldirection or request to test for, monitor, clean up, remove,contain, treat, detoxify or neutralize pollutants.
"Pollutants" means any solid, liquid. gaseousor thermal irritant or contaminant. including smoke. vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
Subparagraphsa) and d)(i) of paragraph (1) of this exclusion do not apply to loss occurrences caused by heat, smoke or fumes from a hostile fire. As used herein, "hostile fire" means one which becomesuncontrollable or breaks out from where it was intended to be.
"Original assured" as used herein means all insureds as defined in the policy issued by the Company.
NUCLEAR INCIDENT EXCLUSION CLAUSE- LIABILITY- REINSURANCE- U.S.A.
▇.▇▇ 1590
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. in 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 EXCLUSIONPROVISION*
I. It is agreed that the policy does not apply under any liability coverage, to injury, sickness, disease, death or destruction, bodily injury or property damage 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.
II. Family Automobile Policies (liability only), Special Automobile Policies (private passenger automobiles, liability only), Farmers Comprehensive Personal Liabilities 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 EXCLUSIONPROVISION*
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 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 raw 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, first aid, to expenses incurred with respect to bodily injury, sickness, disease or death, bodily injury resulting from the hazardous properties of 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. bodily injury or property damage arises out of the 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 the tailings or wastes produced by the extraction or concentration of uranium or thorium from any ore processed for its source material content and (2) resulting from the operation by any person or organization of any nuclear facility included within the definition of nuclear facility under paragraph (a) or (b) thereof; "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 ▇▇▇▇▇▇▇▇ ▇▇▇▇ of fissionable material; with respect to injury to or destruction of property, the word "injury" or "destruction" includes all forms of radioactive contamination of property; "property damage" 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 operations 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 BOLD TYPE in the Limited Exclusion Provision and in the Broad Exclusion Provision shall apply only in relation to original liability policies which include a Limited ExclusionProvision or a Broad ExclusionProvisioncontaining those words.