1
10(Z)
PROPERTY CATASTROPHE OVERLYING EXCESS OF LOSS
REINSURANCE CONTRACT BETWEEN
STATE AUTOMOBILE MUTUAL INSURANCE COMPANY,
MILBANK INSURANCE COMPANY,
STATE AUTO NATIONAL INSURANCE COMPANY
AND STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY
DATED JULY 1, 1996
2
STATE AUTO MUTUAL INSURANCE COMPANY
MILBANK INSURANCE COMPANY
STATE AUTO NATIONAL INSURANCE COMPANY
PROPERTY CATASTROPHE OVERLYING EXCESS OF LOSS
REINSURANCE CONTRACT
TABLE OF CONTENTS
-----------------
ARTICLE NO. TITLE PAGE
- ----------- ----- ----
ARTICLE I BUSINESS COVERED 1
ARTICLE II EXCLUSIONS 1 - 2
ARTICLE III TERM 3
ARTICLE IV TERRITORY 3
ARTICLE V AMOUNT OF LIMIT AND RETENTION 3
ARTICLE VI ULTIMATE NET LOSS 3 - 4
ARTICLE VII NET RETAINED LINES 4
ARTICLE VIII UNDERLYING EXCESS 4
ARTICLE IX DEFINITION OF LOSS OCCURRENCE 4 - 6
ARTICLE X NOTICE OF LOSS AND LOSS SETTLEMENT 6
ARTICLE XI PREMIUM 6
ARTICLE XII CURRENCY 6
ARTICLE XIII OFFSET 7
ARTICLE XIV ACCESS TO RECORDS 7
ARTICLE XV ERRORS AND OMISSIONS 7
ARTICLE XVI TAXES 7
ARTICLE XVII INSOLVENCY 8
ARTICLE XVIII ARBITRATION 8 - 9
3
PROPERTY CATASTROPHE OVERLYING EXCESS OF LOSS
REINSURANCE CONTRACT
BETWEEN
STATE AUTO MUTUAL INSURANCE COMPANY
MILBANK INSURANCE COMPANY
STATE AUTO NATIONAL INSURANCE COMPANY
(HEREINAFTER COLLECTIVELY REFERRED TO AS THE "COMPANY")
AND
STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY
(HEREINAFTER REFERRED TO AS THE SUBSCRIBING "REINSURER")
ARTICLE I
BUSINESS COVERED:
The Reinsurer shall indemnify the Company for the net excess
liability as hereinafter provided and specified, which may accrue
to the Company as a result of any loss or losses which may occur
during the currency of the Contract under any and all policies,
contracts, binders and other evidence of insurance and
reinsurance, oral or written (hereinafter referred to as
"Policies") heretofore or hereafter issued or entered into by or
on behalf of the Company and classified by the Company as Fire,
Allied Lines, Homeowners (property coverages), Farmowners
(property coverages), Commercial Multiple Peril policies
(property coverages), Ocean Marine, Inland Marine and Automobile
Physical Damage.
ARTICLE II
EXCLUSIONS:
The following shall be excluded from the scope of this Contract:
1. Business written and classified by the Company as:
a) Aviation Insurance;
b) Casualty Insurance (i.e. Accident, Health, Third Party
Liability, Workers Compensation and Employers
Liability, Fidelity, Plate Glass and Burglary and Theft
when written as such);
c) Credit Insurance;
d) Financial Guarantee Insurance;
e) Insolvency Insurance;
f) Life Insurance;
PAGE 1 OF 9
4
g) Mortgage Impairment Insurance;
h) Title Insurance;
i) Surety;
j) Flood Insurance when written as such;
k) Earthquake Insurance when written as such;
l) Difference in Conditions Insurance;
m) Ocean Marine Insurance, except yachts;
n) Boiler and Machinery;
o) Multiple Peril policies other than the Property
coverages as included in the Business Covered Section,
hereof;
p) Reinsurance, but not to exclude so-called agency
reinsurance, reinsurance of an individual risk or
policy, or any intercompany pooling arrangements.
2. Wind and Hail on growing and standing crops.
3. Manufacture, processing, storage, filling or breaking down
of explosives.
4. Oil and petrochemical refineries and pipelines and oil or
gas drilling rigs.
5. Excess of Loss insurance or reinsurance where the deductible
exceeds $99,999.
6. Bridges and Tunnels where the Total Insured Value over all
interests exceeds $250,000,000.
7. Extra Contractual Obligations and Losses in Excess of Policy
Limits as per attached Exclusion Clause.
8. Loss/or Damage/or Costs/or Expenses arising from seepage
and/or Pollution and/or Contamination, other than
Contamination from Smoke Damage. Nevertheless, this
exclusion does not preclude payment of the cost of removal
of debris of property damaged by a loss otherwise covered
hereunder, but subject always to a limit of 25% of the
Company's property loss under the original policy.
9. Loss in respect of overhead transmission and distribution
lines and their supporting structure other than those on or
within 150 meters (or 500 feet) of the insured premises. It
is understood and agreed that public utilities extension
and/or suppliers extension and/or contingent business
interruption coverages are not subject to this exclusion,
provided that these are not part of a transmitters' or
distributors' policy.
10. Insolvency Fund Exclusion Clause.
11. War Risk Exclusion Clause.
12. Pools and Associations Exclusion Clause.
13. Nuclear Incident Exclusion Clauses - Physical Damage -
Reinsurance - U.S.A. and Canada.
PAGE 2 OF 9
5
ARTICLE III
TERM:
The term of this Contract shall be from 12:01 A.M. Standard Time,
July 1, 1996 to 12:01 A.M. Standard Time, July 1, 1997.
If the liability of the Reinsurer under this Contract terminates
while a loss occurrence giving rise to a claim hereunder is in
progress, then the Reinsurer shall be liable as if the whole loss
occurrence had occurred during the term of this Contract,
provided that no part of that loss occurrence is claimed against
any renewal or replacement of this Contract.
ARTICLE IV
TERRITORY:
This Contract shall cover wherever the Company's Policies cover.
ARTICLE V
AMOUNT OF LIMIT AND RETENTION:
No claim shall be made hereunder unless and until the Company and
other members of the State Auto Insurance Companies Group, being
State Automobile Mutual Insurance Company, State Auto Property
and Casualty Insurance Company, Milbank Insurance Company, and
State Auto National Insurance Company, hereinafter referred to as
the "Group", on a pooled basis where applicable, shall first have
sustained an Ultimate Net Loss in excess of $120,000,000,
regardless of the number of Policies under which such loss is
payable or the number of interests insured. The Reinsurer shall
then be liable for the amount of Ultimate Net Loss for the
Company in excess of $120,000,000 Ultimate Net Loss each
occurrence, but the sum recoverable from the Reinsurer in respect
of each loss occurrence shall not exceed $100,000,000, nor more
than $100,000,000 in respect of all loss occurrences during the
term of this contract.
The amount of coverage is subject to at least two risks being
involved in the same loss occurrence.
ARTICLE VI
ULTIMATE NET LOSS:
The term "ultimate net loss" shall mean the amount that the
Company pays, such loss to include all expenses incurred by the
Company in connection with the settlement of losses or resistance
to or negotiations concerning a loss, including salaries and
expenses of employees of the Company while diverted from their
normal duties to the service of field adjustment
PAGE 3 OF 9
6
but shall not include any office expenses of the Company.
However, nothing in this Article shall be construed to prevent
the Company from including all such amounts defined as ultimate
net loss attributable to the Group on a pooled basis for the
first $120,000,000 of ultimate net loss.
All salvages and recoveries and payments (net of the cost of
obtaining any salvage, recovery or payment), whether recovered or
received prior or subsequent to loss settlement under this
Contract, including amounts recoverable under all Reinsurances
whether collected or not, shall be applied as if recovered or
received prior to the aforesaid settlement and shall be deducted
from the actual loss incurred to arrive at the amount of ultimate
net loss. Nothing in this Article shall be construed to mean
losses are not recoverable until the ultimate net loss to the
Company has been ascertained.
ARTICLE VII
NET RETAINED LINES:
This Contract applies to only that portion of any policy which
the Company and the other member of the Group, on a pooled basis
where applicable, retains net for its own account.
The amount of the Reinsurer's liability hereunder in respect of
any loss shall not be increased by reason of the inability of the
Company to collect from any other Reinsurer, whether specific or
general, any amounts which may have become due whether such
inability arises from the insolvency of such other Reinsurer or
otherwise.
ARTICLE VIII
UNDERLYING EXCESS:
The Company has in force underlying catastrophe excess of loss
reinsurance and recoveries thereunder shall be disregarded for
all purposes of this Contract and shall inure to the sole benefit
of the Company.
ARTICLE IX
DEFINITION OF LOSS OCCURRENCE:
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
one hundred sixty-eight (168) consecutive hours arising out of
and directly occasioned by the same event except that the term
"loss occurrence" shall be further defined as follows:
PAGE 4 OF 9
7
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 seventy-two (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 seventy-two (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 seventy-two (72) consecutive hours
may be extended in respect of individual losses which
occur beyond such seventy-two (72) consecutive hours
during the continued occupation of an insured'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 one hundred and sixty-eight (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".
For all "loss occurrences" except as referred to under
sub-paragraph B, 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 one hundred and sixty-eight (168) consecutive
hours shall apply with respect to one event, except for those
"loss occurrences" referred to in sub-paragraph A above, where
only one such period of seventy-two (72) consecutive hours shall
apply with respect to one event, regardless of the duration of
the event.
As respect those "loss occurrences" referred to in sub-paragraph
B above, if the disaster, accident or loss occasioned by the
event is of greater duration than seventy-two (72) consecutive
hours, then the Company may divide that disaster, accident or
loss into two or more "loss occurrences" provided no two periods
overlap and no individual loss is included in more than one such
period and provided that no period commences 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.
PAGE 5 OF 9
8
No individual losses occasioned by an event that would be covered
by seventy-two (72) hours clauses may be included in any "loss
occurrence" claimed under the one hundred and sixty-eight (168)
hours provision.
ARTICLE X
NOTICE OF LOSS AND LOSS SETTLEMENT:
The Company shall adjust, settle, or compromise all claims and
losses hereunder.
All loss settlements by the Company which comply with the terms
hereof shall be unconditionally binding upon the Reinsurer.
The Company shall advise the Reinsurer promptly of all claims and
any subsequent developments pertaining thereto, which may, in the
Company's opinion, develop into losses involving Reinsurance
hereunder. Inadvertent omission or oversight in dispatching such
advices shall in no way affect the liability of the Reinsurer
under this Contract provided the Company informs the Reinsurer of
such omission or oversight promptly upon its discovery.
The Reinsurer shall tender all loss payments as soon as
practicable after receipt of any proof of loss.
ARTICLE XI
PREMIUM:
The premium to be paid to the Reinsurer shall be $3,000,000,
payable in four equal quarterly installments.
ARTICLE XII
CURRENCY:
All retentions, limits and premiums referenced in this Contract
are expressed in United States Dollars and all payments made by
either party shall be made in United States Dollars.
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.
PAGE 6 OF 9
9
ARTICLE XIII
OFFSET:
The Company and the Reinsurer, each at its option, may offset any
balance or balances, whether on account of premiums, claims and
losses, loss expenses or salvages due from one party to the other
under this Contract; provided, however, that in the event of the
insolvency of a party hereto, offsets shall only be allowed in
accordance with applicable statutes and regulations.
ARTICLE XIV
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 Contract and thereafter, all books, records and papers of
the Company in connection with any reinsurance hereunder, or the
subject matter hereof.
ARTICLE XV
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 either party if such delay, omission or error had not been
made, provided such delay, omission or error is rectified as soon
as practicable after discovery.
ARTICLE XVI
TAXES:
In consideration of the terms under which this Contract is
issued, the Company undertakes not to claim any deduction of the
premium hereon when making Canadian tax returns, or when making
tax returns, other than income or profits tax returns, to any
state or territory of the United States of America or to the
District of Columbia.
ARTICLE XVII
INSOLVENCY:
The reinsurance under this Contract shall be payable by the
Reinsurer on the basis of the liability of one or more of the
Companies under the Policy or Policies reinsured without
diminution because of the insolvency of one or more of the
Companies reinsured or because
PAGE 7 OF 9
10
the liquidator, receiver, conservator or statutory successor of
the Company(ies) has failed to pay all or a portion of any claim.
In the event of the insolvency of one or more of the Companies
reinsured, the liquidator, receiver, conservator or statutory
successor of the Company(ies) shall give written notice to the
Reinsurer of the pendency of a claim against the insolvent
Company(ies) on the Policy or Policies reinsured within a
reasonable time after such claim is filed in the insolvency
proceeding and during the pendency of such claim the Reinsurer
may investigate such claim and interpose, at its own expense, in
the proceeding where such claim is to be adjudicated any defense
or defenses which it may deem available to the Company(ies) or
its liquidator, receiver, conservator or statutory successor. The
expense thus incurred by the Reinsurer shall be chargeable
subject to court approval against the insolvent Company(ies) as
part of the expense of liquidation to the extent of a
proportionate share of the benefit which may accrue to the
Company(ies) solely as a result of the defense undertaken by the
Reinsurer.
Where two or more Reinsurers are involved in the same claim and a
majority in interest elect to interpose defense to such claim,
the expense shall be apportioned in accordance with the terms of
this Contract as though such expense had been incurred by the
Company(ies).
In the event of the insolvency of one or more of the Companies
reinsured, the reinsurance under this Contract shall be payable
by the Reinsurer directly to the Company(ies) or to the
liquidator, receiver, conservator or statutory successor, except
as provided by subsection (A) of section 4118 of the Insurance
Law of New York or except where (I) the Contract specifies
another payee of such Reinsurance in the event of the insolvency
of the Company(ies) and (II) the Reinsurer with the consent of
the direct insureds and, with the prior approval of the
Superintendent of Insurance of New York to the certificate of
assumption issued to New York direct insureds, has assumed such
policy obligations of the Company(ies) as its direct obligations
to the payees under such policies, in substitution for the
obligations of the Company(ies) to such payees.
ARTICLE XVIII
ARBITRATION:
If any dispute shall arise between the parties to this Contract,
either before or after its termination, with reference to the
interpretation of this Contract or the rights of either party
with respect to any transactions under this Contract, including
the formation or validity thereof, the dispute shall be referred
to three (3) arbitrators as a condition precedent to any right of
action arising under this Contract. The arbitrators shall be
active or retired disinterested officers of insurance or
reinsurance companies or Lloyd's Underwriters other than the
parties or their affiliates. One arbitrator shall be chosen by
each party and the third by the two so chosen. If either party
refuses or neglects to appoint an arbitrator within thirty (30)
days after the receipt of written notice from the other party
requesting it to do so, the requesting party may nominate two (2)
arbitrators who shall choose the third.
In the event the arbitrators do not agree on the selection of the
third arbitrator within thirty (30) days after both arbitrators
have been named, the Company shall petition the American
Arbitration Association to appoint the third arbitrator. If the
American Arbitration
PAGE 8 OF 9
11
Association fails to appoint the third arbitrator within thirty
(30) days after it has been requested to do so, either party may
request a justice of a court of general jurisdiction of the state
in which the arbitration is to be held, to appoint an officer or
retired officer of an insurance or reinsurance company or Lloyd's
Underwriter as the third arbitrator. In the event both parties
request the appointment of the third arbitrator, the third
arbitrator shall be the soonest named in writing by the justice
of the court.
Each party shall submit its case to the arbitrators within thirty
(30) days of the appointment of the arbitrators. The arbitrators
shall consider this Contract an honorable engagement rather than
merely a legal obligation; they are relieved of all judicial
formalities and may abstain from following the strict rules of
law. The decision of a majority of the arbitrators shall be final
and binding on both the Company and the Reinsurer. Judgment may
be entered upon the award of the arbitrators in any court having
jurisdiction.
Each party shall bear the fee and expenses of its own arbitrator,
one half of the fee and the expenses of the third arbitrator and
one half of the other expenses of the arbitration. In the event
both arbitrators are chosen by one party, the fees of the
arbitrators shall be equally divided between the parties.
Any such arbitration shall take place in Columbus, Ohio unless
some other location is mutually agreed upon by the parties.
PAGE 9 0F 9
12
INSOLVENCY FUNDS EXCLUSIONS 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 payment 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.
13
EXTRA CONTRACTUAL OBLIGATIONS AND
LOSSES IN EXCESS OF POLICY LIMITS EXCLUSION CLAUSE
Notwithstanding any other provision of this Contract, the Reinsurer shall not be
liable to the Reassured for any Extra Contractual Obligations or Losses in
Excess of Policy Limits.
"Extra Contractual Obligations" means those liabilities of the Reassured,
together with any legal costs and expenses incurred in connection therewith,
paid or payable by the Reassured as a result of an action against it, by any
assured, the assignee of any assured, or a third party claimant, which arise
from the handling of any claim on any insurance policy, such liabilities arising
because of, but not limited to, the following; failure by the Reassured 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 assured or in the
preparation or prosecution of an appeal consequent upon such action.
"Losses in Excess of Policy Limits" means those losses of the Reassured in
excess of the limit of any policy of insurance reinsured hereunder, such loss in
excess of the limit having been incurred because of failure by the Reassured to
settle within the policy limit or by reason of alleged or actual negligence,
fraud, or bad faith in rejecting an offer or settlement or in the preparation of
the defense or in the trial of any action against its assured or in the
preparation or prosecution of an appeal consequent upon such action.
No inference shall be drawn from the foregoing exclusion of liabilities that
this Contract or any portion of this Contract otherwise covers such liabilities
in the absence of said exclusion.
14
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -
REINSURANCE - CANADA
APPLICABLE TO POLICIES BECOMING EFFECTIVE ON AND AFTER
JANUARY 1, 1985
(SEE NOTE)
1. This Agreement does not cover any loss or liability accruing to the
Reinsured, 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 Agreement does not cover any loss or liability accruing to the Reinsured,
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:
(A) Nuclear reactor power plants including all auxiliary property on
the site, or
(B) Any other nuclear reactor installation, including laboratories
handling radioactive materials in connection with reactor
installations, and critical facilities as such, or
(C) Installations for fabricating complete fuel elements or for
processing substantial quantities of prescribed substances, and
for reprocessing, salvaging, chemically separating, storing or
disposing of spent nuclear fuel or waste materials, or
(D) Installations other than those listed in (C) above using
substantial quantities of radioactive isotopes or other products
of nuclear fission.
3. Without in any way restricting the operations of paragraphs 1 and 2 of this
Clause, this Agreement does not cover any loss or liability by radioactive
contamination accruing to the Reinsured, 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 installations and which normally
would be insured therewith, except that this paragraph 3 shall not operate
(A) Where the Reinsured 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.
15
4. Without in any way restricting the operation of paragraphs 1, 2, and 3 of
this Clause, this Agreement does not cover any loss or liability by radioactive
contamination accruing to the Reinsured, directly or indirectly, and whether as
Insurer or Reinsurer, when such radioactive contamination is a named hazard
specifically insured against.
5. This Clause shall not extend to risks using radioactive isotopes in any
form where the nuclear exposure is not considered by the Reinsured to be the
primary hazard.
6. The term "prescribed substances" shall have the meaning given it by the
Atomic Energy Control Act R.S.C. 1974, or by any law amendatory thereof.
7. The Reinsured to be sole judge of what constitutes:
(A) substantial quantities, and
(B) the extent of installation, plant or site.
8. Without in any way restricting the operation of paragraphs 1, 2, 3 and 4 of
this Clause, this Agreement does not cover any loss or liability accruing to the
Reinsured, directly or indirectly, and whether as Insurer or Reinsurer caused by
any nuclear incident as defined in the Nuclear Liability Act, nuclear explosion
or contamination by radioactive material.
NOTE: In addition, this Clause is applicable to all original contracts of
the Reinsured in effect prior to January 1, 1985 whether new,
renewal or replacement which incorporate a Nuclear
Incident/Radioactive Contamination Exclusion as contained in form
IBC 1105 1-82.
16
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -
REINSURANCE - U.S.A.
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
handling 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 operations of paragraphs (1) and
(2) hereof, 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 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 operations of paragraphs (1), (2)
and (3) hereof, 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.
17
5. It is understood and agreed that 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.
6. The term "special nuclear material" shall have the meaning given it
in the Atomic Energy Act of 1954, or by any law amendatory thereof.
7. The 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 31st
December 1957 shall be free from the application of the other
provision of this Clause until expiry date or 31st 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 31st December 1958 shall be free
from the application of the other provisions of this Clause
until expiry date or 31st December 1960, whichever first
occurs whereupon all the provisions of this Clause shall
apply.
18
POOLS, ASSOCIATIONS & SYNDICATES EXCLUSION CLAUSE
SECTION A:
EXCLUDING:
(1) All Business derived directly or indirectly from any Pool,
Association or Syndicate which maintains its own reinsurance
facilities.
(2) Any Pool or Scheme (whether voluntary or mandatory) formed
after March 1, l968 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; Associated Factory Mutuals; Improved Risk
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:
(1) Where the Total Insured Value over all interests of the risk
in question is less than $250,000,000.
(2) To interests traditionally underwritten as Inland Marine or
Stock and/or Contents written on a Blanket basis.
(3) 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,
other than as provided for under Section B (1).
(4) To risks as follows: Offices, Hotels, Apartments, Hospitals,
Educational Establishments, Public Utilities (other than
Railroad Schedules) and Builder's Risks on the classes of
risks specified in this subsection (4) only.
19
SECTION C:
Where this Clause attaches to catastrophe excesses, the following Section C is
added:
NEVERTHELESS the Reinsurer specifically agree that liability accruing to the
Company from its participation in:
(l) The following so-called "Coastal Pools":
ALABAMA INSURANCE UNDERWRITING ASSOCIATION
FLORIDA WINDSTORM UNDERWRITING ASSOCIATION
LOUISIANA INSURANCE UNDERWRITING ASSOCIATION
MISSISSIPPI WINDSTORM UNDERWRITING ASSOCIATION
NORTH CAROLINA INSURANCE UNDERWRITING ASSOCIATION
SOUTH CAROLINA WINDSTORM AND HAIL UNDERWRITING
ASSOCIATION
TEXAS CATASTROPHE PROPERTY INSURANCE ASSOCIATION
and
(2) All "FAIR Plan" and "Rural Risk Plan" business, including the
Florida Residential Property and Casualty Joint Underwriting
Association and the Florida Property and Casualty Joint
Underwriting Association ("JUA").
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:
(1) the inability of any other participant in such "Coastal Pool"
and/or "FAIR Plan" and/or "Rural Risk Plan" and/or Residual
Market Mechanisms to meet its liability.
(2) any claim against such "Coastal Pool" and/or "FAIR Plan"
and/or "Rural Risk 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 Insolvency Fund Exclusion
Clause incorporated in this Contract).
20
SECTION D:
Notwithstanding Section C above, in respect of the FWUA, FPCJUA and RPCJUA,
where an assessment is made against the Company by the FWUA, the FPCJUA, the
RPCJUA, or any combination thereof, the maximum loss that the Company may
include in the Ultimate Net Loss in respect of any loss occurrence hereunder
shall not exceed the lesser of:
(1) The Company's assessment from the relevant entity (FWUA,
FPCJUA and/or RPCJUA) for the accounting year in which the
loss occurrence commenced, or
(2) The product of the following:
a) The Company's percentage participation in the relevant
entity for the accounting year in which the loss
occurrence commenced; and
b) The relevant entity's total losses in such loss
occurrence.
Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of the FWUA, the FPCJUA
and/or the RPCJUA, the Ultimate Net Loss hereunder shall not include any monies
expended to purchase or retire bonds as a consequence of being a member of the
FWUA, the FPCJUA and/or the RPCJUA. For the purposes of this Contract, the
Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by the FWUA, the FPCJUA and/or the RPCJUA to meet
the obligations of an insolvent insurer member or other party, or to meet any
obligations arising from the deferment by the FWUA, FPCJUA and/or RPCJUA of the
collection of monies.
21
NORTH AMERICAN WAR EXCLUSION CLAUSE (REINSURANCE)
Approved by Lloyd's Underwriters' Fire and Non-Marine Association
"As regards interests which at time of loss or damage are on shore, no liability
shall attach hereto in respect of any loss or damage which is occasioned by war,
invasion, hostilities, acts of foreign enemies, civil war, rebellion,
insurrection, military or usurped power, or martial law or confiscation by order
of any government or public authority.
This War Exclusion Clause shall not, however, apply to interests which at time
of loss or damage are within the territorial limits of the United States of
America (comprising the fifty States of the Union and the District of Columbia,
its territories and possessions including Panama Canal Zone and the Commonwealth
of Puerto Rico and including Bridges between the U.S.A. and Mexico provided they
are under United States ownership), Canada, St. Pierre and Miquelon, provided
such interests are insured under policies, endorsements or binders containing a
standard war or hostilities or warlike operations exclusion clause."
Nevertheless, this Clause shall not be construed to apply to riots, strikes,
civil commotion, vandalism, malicious damage including acts committed by the
agent of any government, party or faction engaged in war, hostilities, or other
warlike operation, providing such agent is acting secretly and not in connection
with any operations of military or naval armed forces in the country where the
interest insured is situated.