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01-95-0694
EXHIBIT 10.12
PHYSICIAN MEDICAL MALPRACTICE/HOSPITAL PROFESSIONAL LIABILITY
QUOTA SHARE REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
entered into by and between
HANNOVER RUCKVERSICHERUNGS - AKTIENGESELLSCHAFT
XXXXX UND XXXXX RUCKVERSICHERUNGS - AKTIENGESELLSCHAFT
Hannover, Germany
(hereinafter referred to as the "Company")
and
The Subscribing Reinsurer(s) executing the
Interests and Liabilities Contract(s)
attaching to and forming a part
of this Agreement
(each hereinafter referred to as the "Reinsurer")
WITNESSETH:
The Reinsurer hereby reinsures the Company to the extent and on the
terms and conditions and subject to the exceptions, exclusions and limitations
hereinafter set forth and nothing hereinafter shall in any manner create any
obligations or establish any rights against the Reinsurer in favor of any third
parties or any persons not parties to this Agreement.
ARTICLE I
BUSINESS COVERED:
A. The Company shall cede to the Reinsurer and the Reinsurer shall accept
from the Company a variable excess quota share participation of the net
retained liability of the Company on each risk insured under new and renewal
policies becoming effective at and after Local Standard Time, January 1, 1995,
as respects Claims Made or Losses Reported at and after said date, covering
business classified by the Company as Physician Medical Malpractice and
Hospital Professional Liability, including Comprehensive Liability, written on
a Claims Made or Losses Reported basis, except as excluded in the Exclusions
Article, subject to the limits set forth in the Limits of Cover Article.
B. The term "policies" as used herein means the Company's binders,
policies and contracts providing Claims Made or Losses Reported reinsurance on
the business covered under this Agreement. Original Policies not to exceed
eighteen (18) months other than by Special Acceptance.
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ARTICLE II
TERM:
A. This Agreement will apply to Claims Made or Losses Reported under new
and renewal policies incepting during the period January 1, 1995 through
December 31, 1995, both days inclusive.
B. Notwithstanding the termination of this Agreement as hereinabove
provided, the provisions of this Agreement shall continue to apply to all
unfinished business hereunder to the end that all obligations and liabilities
incurred by each party hereunder prior to such termination shall be fully
performed and discharged.
ARTICLE III
TERRITORY:
This Agreement shall be worldwide in its geographical scope.
ARTICLE IV
EXCLUSIONS:
This Agreement does not apply to and specifically excludes the
following:
1. Insolvency Funds, per the attached "Insolvency Fund Exclusion
Clause".
2. Loss or liability excluded by the attached "Nuclear Incident
Exclusion Clause -Liability - Reinsurance", U.S.A. and Canada.
3. Primary Insurance Business, Facultative Reinsurance and
Retrocessional Reinsurance, when written as such, unless
mutually agreed upon by the Reinsurer. This Exclusion shall
not apply to "Pure" Fronting Agreements and Reinsurance of
Captives.
4. Hospital Professional Liability, including Comprehensive
General Liability Business Excess of Shared Aggregate
Retentions other than business written with aggregate
underlying amounts (potential drop down exposures) which shall
require that these underlying amounts shall apply on a per
location (as defined) basis. Minimum aggregate underlying
amounts shall be three times the primary per occurrence amount
or $10,000,000 whichever is the greater.
ARTICLE V
LIMITS OF COVER:
A. The reinsurance provided hereunder is in two sections as follows:
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Section I. With respect to business classified as Physician Medical
Malpractice Liability:
The liability of the Reinsurer shall not exceed $500,000 each and every
Claim and/or Loss any one section any one original placement for one
(1) line.
Section II. With respect to business classified as Hospital
Professional, including Comprehensive General Liability:
The liability of the Reinsurer shall not exceed $750,000 each and every
Claim and/or Loss any one section any one original placement for one
(1) line.
B. The term "placement" as used herein shall be defined as one or more
layers of coverage to the same Original Insured or Original Reinsured.
C. No cession(s) to be made hereunder unless the Original Policy or
Contract Limits are excess of at least $2,000,000.
D. This Agreement is extended to protect the Company for 100% of any loss
in Excess of Original Policy Limits and/or any Extra Contractual Obligations as
defined in the respectively titled Articles herein; provided, however, the
contractual loss and the Excess of Original Policy Limits and Extra Contractual
Obligations loss(es) combined shall not exceed the limit set forth above, each
and every Claim and/or Loss any one Section any one Original Placement per unit
accepted.
ARTICLE VI
COMPANY RETENTION:
(The following shall apply only to Section II - Hospital Professional
Liability, including Comprehensive Liability policies ceded hereunder.)
A. The Company will always retain a Minimum Involvement of $1,000,000 net
and unreinsured in any program on which cessions are made hereunder. It is
specially agreed that this net amount will be retained either in the Layer
ceded or any underlying Layers, if applicable, or the combination thereof.
B. Irrespective of the above, the Company is not permitted to make 100%
cessions hereunder and the Company's net retention will not be less than 20%,
subject to a minimum of $1,000,000.
ARTICLE VII
DEFINITIONS:
A. The term "net retained liability" as used herein means the remaining
portion of the Company's gross liability on each risk reinsured under this
Agreement after deducting recoveries from all inuring reinsurance.
B. The term "claims made" as used herein shall follow the definition set
forth in the Company's original policies.
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ARTICLE VIII
ORIGINAL CONDITIONS:
All amounts ceded hereunder shall be subject to the same gross rates
and to the same clauses, conditions, and modifications of the Company's
policies, subject to the limits, terms and conditions of this Agreement.
ARTICLE IX
FOLLOW THE FORTUNES:
The Reinsurer shall follow the fortunes of the Company in all matters
falling under this Agreement.
ARTICLE X
EXCESS OF ORIGINAL POLICY LIMITS:
A. This Agreement shall protect the Company, within the limits hereof, in
connection with loss in excess of the limit of its original policy, such loss
in excess of the limit having been incurred because of failure by it 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 reinsured or in
the preparation or prosecution of an appeal consequent upon such action.
B. However, this Article 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.
C. 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 XI
EXTRA CONTRACTUAL OBLIGATIONS:
A. This Agreement shall protect the Company for any Extra Contractual
Obligations within the limits hereof. The term "Extra Contractual Obligations"
is 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 rejecting an
offer of settlement or in the preparation of the defense or in the trial of any
action against its insured or reinsured or in the preparation or prosecution of
an appeal consequent upon such action.
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B. 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
disaster and/or casualty.
C. However, this Article 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.
ARTICLE XII
LOSSES, LOSS ADJUSTMENT EXPENSES AND SALVAGES:
A. The Company shall settle all loss claims under its policies and the
Reinsurer shall pay to the Company its pro rata share of such loss claims as
payable by the Company.
B. The Reinsurer shall also bear its pro rata share of expenses incurred
by the Company in the investigation, adjustment and litigation of all claims
under its policies, including those of salaried adjusters, but excluding the
office expenses of the Company and the salaries and expenses of its other
employees.
C. The Reinsurer shall benefit pro rata in all salvages, discounts and
other recoveries.
ARTICLE XIII
REINSURANCE PREMIUM:
A. The Company shall pay to the Reinsurer on each amount ceded under this
Agreement a pro rata share of the Company's Original Net Premiums received by
the Company on the business covered hereunder less 6.50% Overriding Commission
allowed to the Company.
B. The term "Original Net Premiums" shall mean Gross Premiums received by
the Company less the Company's Original Brokerage Acquisition Costs, Ceding
Commissions, Taxes, etc.
ARTICLE XIV
REPORTS AND REMITTANCES:
A. The Company will provide the Reinsurer with all necessary data
respecting premiums and losses, including reserves thereon, as at dates and on
forms mutually acceptable to the Company and the Reinsurer.
B. Within sixty (60) days following the end of each calendar quarter, the
Company shall furnish to the Reinsurer a bordereau indicating, as respects each
policy declared hereunder the name of the Insured, the policy number, term,
limit of liability and original premium, plus any additional or return premiums
as respects each cession and the reinsurance premiums thereon.
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C. The Company shall render a quarterly account within sixty (60) days
after the end of each calendar quarter summarizing the following information
relating to reinsurance covered under this Agreement during the said calendar
quarter:
1. Statement of premiums;
2. Statement of losses and loss expenses paid and salvages
recovered;
3. Account Current summarizing premiums, commissions, losses and
loss expenses paid and salvages recovered;
and the balance if any, due the Reinsurer as indicated by the aforesaid Account
Current, shall be remitted by the Company to the Reinsurer along with the
monthly account. Any balance due to the Company shall be remitted by the
Reinsurer within fifteen (15) days upon receipt of the monthly account.
D. The Company shall promptly report to the Reinsurer any individual loss
wherein the Reinsurer's share of such loss is $100,000 or more. At the request
of the Company, the Reinsurer shall reimburse the Company, as soon as possible
but not later than 60 days after proof of payment by the Company is received by
the Reinsurer for the Reinsurer's share of any such loss, provided that the
Reinsurer shall be entitled, at its option, to offset the amount of such loss
against any balance or balances past due. Cash calls paid by the Reinsurer
during the period shall be deducted from the next report.
ARTICLE XV
OFFSET:
The Company and the Reinsurer shall have the right to offset any
balance or amounts due from one party to the other under the terms of this
Agreement. The party asserting the right of offset may exercise such right any
time whether the balances due are on account of premiums or losses or
otherwise.
ARTICLE XVI
CONFIDENTIALITY AND NON-DIVULGENCE CLAUSE:
A. The parties hereto acknowledge there may be portions of this Agreement,
the treaty prospectus or the marketing package that contain confidential,
proprietary information of the Company. The Reinsurer shall maintain the
confidentiality of these statements and representations, either oral or
written, concerning the Company and its business, and shall not disclose these
to any third person without the Company's prior approval.
B. Nevertheless, the Reinsurer may disclose such information without
further approval from the Company in answer to interrogatories, subpoenas or
other legal/arbitration processes, in response to requests by governmental and
regulatory agencies, and as required for the customary needs of the Reinsurer's
applicable retrocessionaires and/or intermediaries. In addition the Reinsurer
may disclose such information, as be necessary in the conduct of its business
operations, to its accountants and its outside legal counsel.
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ARTICLE XVII
ACCESS TO RECORDS:
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
designated representatives, during the term of this Agreement and thereafter,
all books, records and papers of the Company in connection with any reinsurance
hereunder, or the subject matter hereof.
ARTICLE XVIII
ERRORS AND OMISSIONS:
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 neglect, delay,
omission or error is rectified as soon as possible after discovery.
ARTICLE XIX
CURRENCY:
A. Whenever the word "Dollars" or the "$" sign appears in this Agreement,
they shall be construed to mean United States Dollars and all transactions
under this Agreement shall be in United States Dollars.
B. Amounts paid or received by the Company in any other currency shall be
converted to United States Dollars at the rate of exchange at the date such
transaction is entered on the books of the Company.
ARTICLE XX
UNAUTHORIZED REINSURANCE:
(Applies only to a Reinsurer who does not qualify for full credit with any
insurance regulatory authority having jurisdiction over the Company's
reserves.)
A. 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 regulatory authority or set up on its books reserves for unearned
premium and losses covered hereunder which it shall be required by law to set
up, it will forward to the Reinsurer a statement showing the proportion of such
reserves which is applicable to the Reinsurer. The Reinsurer hereby agrees to
fund such reserves in respect of unearned premium, known outstanding losses
that have been reported to the Reinsurer and allocated loss adjustment expense
relating thereto, and losses and allocated loss adjustment expense paid by the
Company but not recovered from the Reinsurer, as shown in the statement
prepared by the Company (hereinafter referred to as "Reinsurer's Obligations")
by funds withheld, cash advances or a Letter of Credit. The Reinsurer shall
have the option of determining the method of funding provided it is acceptable
to the insurance regulatory authorities having jurisdiction over the Company's
reserves.
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B. When funding by a Letter of Credit, the Reinsurer agrees to apply for
and secure timely delivery to the Company of a clean, irrevocable and
unconditional Letter of Credit issued by a bank and containing provisions
acceptable to the insurance regulatory authorities having jurisdiction over the
Company's reserves in an amount equal to the Reinsurer's proportion of said
reserves. Such Letter of Credit shall be issued for a period of not less than
one year, and shall be automatically extended for one year from its date of
expiration or any future expiration date unless thirty (30) days (sixty (60)
days where required by insurance regulatory authorities) prior to any
expiration date the issuing bank shall notify the Company by certified or
registered mail that the issuing bank elects not to consider the Letter of
Credit extended for any additional period.
C. The Reinsurer and Company agree that the Letters of Credit provided by
the Reinsurer pursuant to the provisions of this Agreement may be drawn upon at
any time, notwithstanding any other provision of this Agreement, and be
utilized by the Company or any successor, by operation of law, of the Company
including, without limitation, any liquidator, rehabilitator, receiver or
conservator of the Company for the following purposes, unless otherwise
provided for in a separate Trust Agreement:
1. to reimburse the Company for the Reinsurer's Obligations, the
payment of which is due under the terms of this Agreement and
which has not been otherwise paid;
2. to make refund of any sum which is in excess of the actual
amount required to pay the Reinsurer's Obligations under this
Agreement;
3. to fund an account with the Company for the Reinsurer's
Obligations. Such cash deposit shall be held in an interest
bearing account separate from the Company's other assets, and
interest thereon not in excess of the prime rate shall accrue
to the benefit of the Reinsurer;
4. to pay the Reinsurer's share of any other amounts the Company
claims are due under this Agreement.
D. In the event the amount drawn by the Company on any Letter of Credit is
in excess of the actual amount required for 1. or 3., or in the case of 4., the
actual amount determined to be due, the Company shall promptly return to the
Reinsurer the excess amount so drawn. All of the foregoing shall be applied
without diminution because of insolvency on the part of the Company or the
Reinsurer.
E. The issuing bank 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.
F. At annual intervals, or more frequently as agreed but never more
frequently than quarterly, the Company shall prepare a specific statement of
the Reinsurer's Obligations, for the sole purpose of amending the Letter of
Credit, in the following manner:
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1. If the statement shows that the Reinsurer's Obligations exceed
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 to the Letter of Credit
increasing the amount of credit by the amount of such difference.
2. If, however, the statement shows that the Reinsurer's
Obligations are less than the balance of credit as of the statement
date, the Company shall, within thirty (30) days after receipt of
written request from the Reinsurer, release such excess credit by
agreeing to secure an amendment to the Letter of Credit reducing the
amount of credit available by the amount of such excess credit.
ARTICLE XXI
ARBITRATION:
A. As a condition precedent to any right of action hereunder, any dispute
arising out of the interpretation, performance or breach of this Agreement,
including the formation or validity thereof, shall be submitted for decision to
a panel of three arbitrators. Notice requesting arbitration will be in writing
and sent certified or registered mail, return receipt requested.
B. One arbitrator shall be chosen by each party and the two arbitrators
shall, before instituting the hearing, choose an impartial third arbitrator who
shall preside at the hearing. If either party fails to appoint its arbitrator
within thirty (30) days after being requested to do so by the other party, the
latter, after ten (10) days notice by certified or registered mail of its
intention to do so, may appoint the second arbitrator.
C. If the two arbitrators are unable to agree upon the third arbitrator
within thirty (30) days of their appointment, the third arbitrator shall be
selected from a list of six individuals (three named by each arbitrator) by a
judge of the federal district court having jurisdiction over the geographical
area in which the arbitration is to take place, or if the federal court
declines to act, the state court having general jurisdiction in such area.
D. All arbitrators shall be disinterested active or former executive
officers of insurance or reinsurance companies or Underwriters at Lloyd's,
London.
E. Within thirty (30) days after notice of appointment of all arbitrators,
the panel shall meet and determine timely periods for briefs, discovery
procedures and schedules for hearings.
F. The panel shall be relieved of all judicial formality and shall not be
bound by the strict rules of procedure and evidence. Unless the panel agrees
otherwise, arbitration shall take place in Hannover, Germany, but the venue may
be changed when deemed by the panel to be in the best interest of the
arbitration proceeding. Insofar as the arbitration panel looks to substantive
law, it shall consider the law of Germany. The decision of any two arbitrators
when rendered in writing shall be final and binding. The panel is empowered to
grant interim relief as it may deem appropriate.
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G. The panel shall make its decision considering the custom and practice
of the applicable insurance and reinsurance business sixty (60) days following
the termination of the hearings. Judgment upon the award may be entered in any
court having jurisdiction thereof.
H. Each party shall bear the expense of its own arbitrator and shall
jointly and equally bear with the other party the cost of the third arbitrator.
The remaining costs of the arbitration shall be allocated by the panel. The
panel may, at its discretion, award such further costs and expenses as it
considers appropriate, including but not limited to attorneys fees, to the
extent permitted by law.
ARTICLE XXII
INTERMEDIARY:
Xxxxxxx Incorporated Reinsurance Intermediaries is hereby recognized as
the Intermediary negotiating this Agreement for all business hereunder. All
communications (including but not limited to notices, statements, premium,
return premium, commissions, taxes, losses, loss adjustment expense, salvages
and loss settlements) relating thereto shall be transmitted to the Company or
the Reinsurer through Xxxxxxx Incorporated Reinsurance Intermediaries, 000
Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000-0000. 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 to constitute payment to
the Company only to the extent that such payments are actually received by the
Company.
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INTERESTS AND LIABILITIES CONTRACT
(hereinafter referred to as the "Contract")
to the
PHYSICIAN MEDICAL MALPRACTICE/HOSPITAL PROFESSIONAL LIABILITY
QUOTA SHARE REINSURANCE AGREEMENT
(hereinafter referred to as the "Agreement")
It is hereby mutually agreed by
HANNOVER RUCKVERSICHERUNGS - AKTIENGESELLSCHAFT
XXXXX UND XXXXX RUCKVERSICHERUNGS - AKTIENGESELLSCHAFT
Hannover, Germany
(hereinafter referred to as the "Company")
and
SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE
Beverly Hills, California
(hereinafter referred to as the "Subscribing Reinsurer")
that the Subscribing Reinsurer shall have a 100% participation in the Interests
and Liabilities of the Reinsurer as set forth in the Agreement attached hereto
entitled Physician Medical Malpractice/Hospital Professional Liability Quota
Share Reinsurance Agreement.
Such participation shall be several and not joint with the
participation of other subscribing reinsurers, and the Subscribing Reinsurer
shall under no circumstances participate in the Interests and Liabilities, if
any, of the other subscribing reinsurers in said Agreement.
The Company shall pay to the Subscribing Reinsurer 100% of all premiums
due or which may become due the Reinsurer in accordance with the provisions of
the Agreement attached.
This Contract shall attach at Local Standard Time, January 1, 1995 and
is subject to the provisions contained in the Term Article of the attached
Agreement, which are hereby incorporated by reference into this Contract and
which shall apply as though they had been specifically provided for herein.
The Agreement to which this Contract is attached and therefore the
Interests and Liabilities of the Subscribing Reinsurer therein, may be changed,
altered and amended as the parties may agree, provided such change, alteration
and amendment is evidenced in writing or by Addendum to this Contract, executed
by the Company and the Subscribing Reinsurer.
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IN WITNESS WHEREOF, the parties hereto have caused this Interests and
Liabilities Contract to be signed in duplicate by their duly authorized
representatives.
Signed in Hannover, Germany
this day of , 199
HANNOVER RUCKVERSICHERUNGS - AKTIENGESELLSCHAFT
XXXXX UND XXXXX RUCKVERSICHERUNGS - AKTIENGESELLSCHAFT
By:_________________________________
Signed in Beverly Hills, California
this day of , 000
XXXXXXXX XXXXXXXXXX PHYSICIANS INSURANCE EXCHANGE
By:_________________________________
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INSOLVENCY FUND 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. "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 payments or assumption by the Company 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.
NOTES: Wherever used herein the term:
"Company" shall be understood to mean "Reassured", "Reinsured" or whatever
other term is used in the attached reinsurance Agreement to designate the
reinsured company.
"Agreement" shall be understood to mean "Contract",
"Policy" or whatever other term is used to designate the attached
reinsurance document.
May 1983 XXXXXXX INCORPORATED REINSURANCE INTERMEDIARIES Page 1 of 1
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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.
( injury, sickness, disease, death or destruction
to ( with respect to which an insured
( under the policy is also an insured
( bodily injury or property damage
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
have 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:
1. 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 State of America, or any agency thereof,
with any person or organization.
XXXXXXX INCORPORATED REINSURANCE INTERMEDIARIES
Page 1 of 2
15
II. Under any Medical Payments Coverage, or under any Supplementary
Payments Provision relating
( immediate medical or surgical death
to ( to expenses incurred with respect
( first aid.
( bodily injury, sickness, disease or death
to ( resulting from the hazardous
( properties of nuclear material and bodily injury
arising out of the operation of a nuclear facility by any person or
organization.
( injury, sickness, disease, death or
III. Under any Liability Coverage to ( 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
( injury, sickness, disease, death or destruction
(c) ( arises out of the furnishing by an insured
( of services, bodily injury or property damage
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
( injury to or destruction of property at such nuclear facility.
to (
( 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 by-product material; "SOURCE MATERIAL," "SPECIAL NUCLEAR
MATERIAL," and "BY-PRODUCT 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 by-product 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.
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*NOTE: The words printed in italics in the Limited Exclusion Provision 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.
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16
NUCLEAR INCIDENT EXCLUSION CLAUSE-
LIABILITY-REINSURANCE
CANADA
1. This Agreement does not cover any loss or liability accruing to the
Company 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 agreed that for all purposes of this Agreement all the
original liability contracts of the Company, whether new, renewal or
replacement, of the following classes, namely,
Personal Liability,
Farmers Liability,
Storekeepers Liability,
which become effective on or after 31st December 1984, shall be deemed to
include, from their inception dates and thereafter, the following
provision:-
LIMITED EXCLUSION PROVISION.
This Policy does not apply to bodily injury or property damage with
respect to which the Insured is also insured under a contract of
nuclear energy liability insurance (whether the Insured is unnamed in
such contract and whether or not it is legally enforceable by the
Insured) issued by the Nuclear Insurance Association of Canada or any
other group or pool of insurers or would be an Insured under any such
policy but for its termination upon exhaustion of its limits of
liability.
With respect to property, loss of use of such property shall be deemed
to be property damage.
3. Without in any way restricting the operation of paragraph 1. of this clause
it is agreed that for all purposes of this Agreement all the original
liability contracts of the Company, whether new, renewal or replacement, of
any class whatsoever (other than Personal Liability, Farmers Liability,
Storekeepers Liability or Automobile Liability contracts), which become
effective on or after 31st December 1984, shall be deemed to include, from
their inception dates and thereafter, the following provision: -
BROAD EXCLUSION PROVISION.
It is agreed that this Policy does not apply:
(a) to liability imposed by or arising under the Nuclear Liability Act;
nor
(b) to bodily injury or property damage with respect to which an Insured
under this policy is also insured under a contract of nuclear energy
liability insurance (whether the Insured is unnamed in such contract
and whether or not it is legally enforceable by the Insured) issued
by the Nuclear Insurance Association of Canada or any other insurer
or group or pool of insurers or would be an Insured under any such
policy but for its termination upon exhaustion of its limit of
liability; nor
(c) to bodily injury or property damage resulting directly or indirectly
from the nuclear energy hazard arising from:
(1) the ownership, maintenance, operation or use of a nuclear
facility by or on behalf of an Insured;
(2) 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; and
(3) the possession, consumption, use, handling, disposal or
transportation of fissionable substances, or of other
radioactive material (except radioactive isotopes, away from a
nuclear facility, which have reached the final stage of
fabrication so as to be useable for any scientific, medical,
agricultural, commercial or industrial purpose) used,
distributed, handled or sold by an Insured.
As used in this Policy:
(i) The term "nuclear energy hazard" means the radioactive, toxic,
explosive, or other hazardous properties or radioactive material;
(ii) The term "radioactive material" means uranium, thorium, plutonium,
neptunium, their respective derivatives and compounds, radioactive
isotopes of other elements and any other substances that the
Atomic Energy Control Board may, by regulation, designate as being
prescribed substances capable of releasing atomic energy, or as
being requisite for the production, use or application of atomic
energy;
XXXXXXX INCORPORATED REINSURANCE INTERMEDIARIES Page 1 of 2
17
(iii) The term "nuclear facility" means:
(a) any apparatus designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a xxxxxxxx xxxx of
plutonium, thorium and uranium or any one or more of them;
(b) any equipment or device designed or used for (i) separating the
isotopes of plutonium, thorium and uranium or any one or more of
them, (ii) processing or utilizing spent fuel, or (iii)
handling, processing or packaging waste;
(c) any equipment or device used for the processing, fabricating or
alloying of plutonium, thorium or uranium enriched in the
isotope uranium 233 or in the isotope uranium 235, or any one or
more of them 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 radioactive
material;
and includes the site on which any of the foregoing is located,
together with all operations conducted thereon and all premises used
for such operations
(iv) The term "fissionable substance" means any prescribed substance that is,
or from which can be obtained, a substance capable of releasing atomic
energy by nuclear fission
(v) With respect to property, loss of use of such property shall be deemed
to be property damage.
NOTES: Wherever used herein the term:
"Company" shall be understood to mean "Reassured", "Reinsured" or whatever
other term is used in the attached reinsurance Agreement to designate the
reinsured company.
"Agreement" shall be understood to mean "Contract", "Policy" or whatever
other term is used to designate the attached reinsurance document.
April 1985
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