TreatiseTreatise

Reinsurance Law

 by John S Diaconis, Douglas W Hammond
 
 Copyright: 2005-2016
 Last Updated: November 2016

 Product Details >> 

Product Details

  • ISBN Number: 9781402406157
  • Page Count: 360
  • Number of Volumes: 1
  •  

Reinsurance has risks for cedents and reinsurers, including the dangers of costly disputes if contracts are flawed. Reinsurance Law helps to minimize that peril by showing you how to structure sound agreements more easily and inexpensively.

This treatise gives you a practical grasp of: the purpose, benefits, markets, and costs of reinsurance • the features, operation, and risk-and-return characteristics of the full range of reinsurance products • the two major industry standards: the Utmost Good Faith and Follow-the-Fortunes doctrines • the key role of intermediaries in reinsurance • and important judicial developments affecting the industry.

Including time-saving checklists and numerous adaptable sample agreements and sample clauses, this practical treatise covers federal and state law, customary industry practices, and relevant case law in clear, straightforward terms. Reinsurance Law examines the rights, duties, objectives, and potential liabilities of every reinsurance participant, while offering the expert drafting guidance that makes reinsurance transactions work. It is an important reference for insurance attorneys, professionals, regulators, and investment advisers.
  Table of Contents
  Introduction
Chapter 1: Reinsurance Basics; and Appendices 1A-1B
  • § 1.1 : Definitions1-2
    • § 1.1.1 : Reinsurance1-2
    • § 1.1.2 : Other Terminology1-3
  • § 1.2 : Nature of Coverage1-4
  • § 1.3 : Purpose1-5
  • § 1.4 : Forms1-6
    • § 1.4.1 : Facultative1-7
    • § 1.4.2 : Treaty1-8
    • § 1.4.3 : Hybrids1-8
  • § 1.5 : Structure1-9
    • § 1.5.1 : Proportional1-9
    • § 1.5.2 : Nonproportional1-11
  • § 1.6 : Retrocessional Coverage1-13
  • § 1.7 : Marketplace1-13
    • § 1.7.1 : Direct Market1-13
    • § 1.7.2 : Broker Market1-14
  • § 1.8 : Role of the Intermediary1-14
    • § 1.8.1 : Generally1-14
    • § 1.8.2 : State Regulation of Intermediaries1-16
  • § 1.9 : Basic Nature of the Reinsurance Relationship1-17
    • § 1.9.1 : Utmost Good Faith1-17
    • § 1.9.2 : Follow the Fortunes1-20
  • Appendix 1A : Excess of Loss Reinsurance Agreement in Treaty FormApp. 1A-1
  • Appendix 1B : Certificate of Casualty Facultative ReinsuranceApp. 1B-1
Chapter 2: “Utmost Good Faith” Doctrine; and Appendices 2A-2B
  • § 2.1 : Introduction2-1
  • § 2.2 : Origins of the Doctrine of Utmost Good Faith2-2
  • § 2.3 : Utmost Good Faith and Nondisclosure2-4
    • § 2.3.1 : Strict Application of Utmost Good Faith2-5
      • [A] : Applied in the Marine Context2-6
      • [B] : Applied in the Nonmarine Context2-7
    • § 2.3.2 : Deviations in the Standard2-10
      • [A] : Higher Burden on Reinsurer2-10
      • [B] : Fiduciary Relationship2-14
    • § 2.3.3 : Duty to Disclose2-17
    • § 2.3.4 : Application of the Duty to Disclose2-20
      • [A] : Actuarial Reports and Loss Projections2-20
      • [B] : Ceding Insurer’s Financial Condition2-21
  • § 2.4 : The Future of Utmost Good Faith2-22
  • § 2.5 : Practical Considerations2-23
  • Appendix 2A : Checklist for Cedents and Reinsurers to Avoid DisputesApp. 2A-1
  • Appendix 2B : Sample “Business Covered” ClausesApp. 2B-1
  • : Sample Access to Records ClauseApp. 2B-2
Chapter 3: Follow-the-Fortunes Doctrine
  • § 3:1 : Introduction3-1
  • § 3:2 : Nature and Purpose of the Doctrine3-2
  • § 3:3 : Implied Follow-the-Fortunes Provision3-6
  • § 3:4 : Reinsurer’s Obligation Regarding Supplemental Benefits Outside of the Applicable Limits of Liability3-8
  • § 3:5 : Cedent’s Decision to Pay Punitive Damages3-10
  • § 3:6 : Covering a Judgment in Excess of Policy Limits for Improper Handling or Defense of a Claim3-12
  • § 3:7 : Cedent’s Allocation of Loss3-14
  • § 3:8 : Conclusion3-18
Chapter 4: Intermediaries
  • § 4.1 : Role of the Reinsurance Intermediary4-1
  • § 4.2 : Agency4-4
    • § 4.2.1 : Intermediary Clause4-4
    • § 4.2.2 : Common Law Agency Principles4-5
  • § 4.3 : Duty of Care4-5
  • § 4.4 : Other Legal Duties4-7
    • § 4.4.1 : Make Reasonable Inquiry into Financial Stability of Reinsurer4-7
    • § 4.4.2 : Effect Desired Cession4-8
    • § 4.4.3 : Transmit Promptly Funds and Communications Between Cedent and Reinsurer4-8
    • § 4.4.4 : Account Properly for All Funds Received or Transmitted4-9
  • § 4.5 : Regulatory Control4-9
    • § 4.5.1 : NAIC Model Act4-9
      • [A] : Licensing4-9
      • [B] : Transactions4-10
      • [C] : Insolvency4-10
      • [D] : Penalties4-11
    • § 4.5.2 : New York Law4-11
Chapter 5: Late Notice
  • § 5.1 : Introduction5-1
  • § 5.2 : Notice Provisions5-2
  • § 5.3 : What Constitutes Late Notice?5-4
  • § 5.4 : Must the Late Notice Prejudice the Reinsurer?5-5
    • § 5.4.1 : Condition Precedent Versus Covenant5-5
    • § 5.4.2 : Prompt Notice As a Covenant5-5
    • § 5.4.3 : Reinsured’s Bad Faith As a Substitute for Prejudice5-8
    • § 5.4.4 : Prompt Notice As a Condition Precedent5-10
    • § 5.4.5 : Where Prejudice Is Required, What Constitutes Prejudice?5-11
  • § 5.5 : Reinsurer’s Remedies for Late Notice5-14
  • § 5.6 : Conclusion5-16
Chapter 6: Arbitration; and Appendices 6A-6H
  • § 6:1 : Arbitration or Litigation6-2
    • § 6:1.1 : Arbitration in the Reinsurance Industry6-2
    • § 6:1.2 : Advantages and Disadvantages6-5
      • [A] : Formality6-5
      • [B] : Location6-6
      • [C] : Discovery6-6
      • [D] : Motions6-6
      • [E] : Joinder of Parties6-7
      • [F] : Publicity6-7
      • [G] : Appeal6-7
      • [H] : Predictability6-8
      • [I] : Speed6-8
      • [J] : Cost6-8
    • § 6:1.3 : Inability to Join Third Party6-9
  • § 6:2 : Federal Law6-10
    • § 6:2.1 : Federal Arbitration Act Chapter 16-11
    • § 6:2.2 : Federal Arbitration Act Chapters 2 and 36-12
  • § 6:3 : State Law6-15
  • § 6:4 : Arbitration Agreements6-15
  • § 6:5 : Arbitrability6-19
    • § 6:5.1 : Actions to Compel Arbitration6-20
    • § 6:5.2 : Motion to Stay Arbitration6-27
    • § 6:5.3 : Arbitration of Claims in Liquidation6-28
  • § 6:6 : Initiating Arbitration6-32
    • § 6:6.1 : Arbitration Demand6-32
    • § 6:6.2 : Appointment of Arbitrators6-33
    • § 6:6.3 : Selection of Umpire6-36
    • § 6:6.4 : Pre-Award Disqualification6-40
  • § 6:7 : Interim Relief6-43
  • § 6:8 : The Hearing6-45
    • § 6:8.1 : Organizational Meeting6-45
    • § 6:8.2 : Location and Atmosphere6-46
    • § 6:8.3 : Gathering Evidence6-46
    • § 6:8.4 : Subpoenas6-49
    • § 6:8.5 : Presenting Evidence6-52
  • § 6:9 : The Award6-54
    • § 6:9.1 : Validity and Confirmation6-54
    • § 6:9.2 : Vacating or Modifying the Award6-57
      • [A] : The Continued Viability of Manifest Disregard, Jurisdiction by Jurisdiction6-66
    • § 6:9.3 : Punitive Damages6-77
  • Appendix 6A : Confidentiality AgreementApp. 6A-1
  • Appendix 6B : Organizational Meeting AgendaApp. 6B-1
  • Appendix 6C : Hold Harmless AgreementApp. 6C-1
  • Appendix 6D : Arbitration LetterApp. 6D-1
  • Appendix 6E : Arbitration ClauseApp. 6E-1
  • Appendix 6F : Federal Arbitration ActApp. 6F-1
  • Appendix 6G : Convention on the Recognition and Enforcement of Foreign Arbitral AwardsApp. 6G-1
  • Appendix 6H : New York Arbitration LawApp. 6H-1
Chapter 7: Discovery
  • § 7:1 : Introduction7-1
  • § 7:2 : Relevance7-2
  • § 7:3 : Privilege7-6
  • § 7:4 : Proprietary Information7-10
  • § 7:5 : Overly Broad Requests7-11
  • § 7:6 : Other Procedural Considerations7-11
    • § 7:6.1 : Ambiguity Requirement7-11
    • § 7:6.2 : In Camera Inspection7-12
  • § 7:7 : Conclusion7-13
Chapter 8: Regulation
  • § 8.1 : Introduction8-1
  • § 8.2 : Credit for Reinsurance8-2
    • § 8.2.1 : Model Law8-3
    • § 8.2.2 : Model Regulations8-5
    • § 8.2.3 : Ninety-Day Rule8-7
  • § 8.3 : Bankruptcy of the Cedent8-7
    • § 8.3.1 : Insurers Rehabilitation and Liquidation Model Act8-7
    • § 8.3.2 : Priority for Reinsurer’s Claims8-9
    • § 8.3.3 : Setoff Rights8-10
    • § 8.3.4 : Cut-Through Provisions8-12
    • § 8.3.5 : Guaranty Associations8-14
  • § 8.4 : Pre-Answer Security8-15
    • § 8.4.1 : Pre-Hearing Security Statutes8-15
    • § 8.4.2 : Arbitration Panels’ Use of Pre-Hearing Security8-17
    • § 8.4.3 : Default Judgment8-17
  • § 8.5 : McCarran-Ferguson Act8-18
    • § 8.5.1 : “Business of Insurance”8-19
    • § 8.5.2 : “Burford” Abstention8-20
    • § 8.5.3 : Arbitration with Cedent’s Liquidator or Rehabilitator8-22
  • § 8.6 : Federal Regulation8-24
    • § 8.6.1 : Congressional Initiatives8-24
    • § 8.6.2 : Gramm-Leach-Bliley Act8-25
      • [A] : Financial Holding Companies8-25
      • [B] : Privacy8-26
  • § 8.7 : International Regulation8-27
Chapter 9: Finite Reinsurance
  • § 9.1 : Introduction9-2
  • § 9.2 : Finite Reinsurance Defined9-3
    • § 9.2.1 : Features of a Finite Reinsurance Contract9-3
      • [A] : Liability Cap9-4
      • [B] : Multiyear Term9-4
      • [C] : Commutation Provision9-4
      • [D] : Specifically Incorporates the Time Value of Money9-4
      • [E] : Profit Sharing9-5
    • § 9.2.2 : Types of Finite Reinsurance Contracts9-5
      • [A] : Funded Cover Contract9-5
      • [B] : Loss Portfolio Transfer9-6
      • [C] : Adverse Development Cover (Retrospective Excess of Loss Agreement)9-6
      • [D] : Spread Loss Coverage (Funded Catastrophe Cover)9-7
      • [E] : Financial Quota Share Reinsurance9-8
  • § 9.3 : The Role of Finite Reinsurance9-8
    • § 9.3.1 : Contractualizing the Long-Term Relationship9-8
    • § 9.3.2 : Bridging the Gap Between Accounting Rules and Reinsurance Economics9-9
    • § 9.3.3 : Unavailability of Reinsurance9-10
    • § 9.3.4 : Cost of Reinsurance9-11
  • § 9.4 : Finite Reinsurance Accounting9-11
    • § 9.4.1 : FAS 1139-11
    • § 9.4.2 : EITF Issue No. 93-69-13
    • § 9.4.3 : SOP 98-79-13
    • § 9.4.4 : NAIC9-14
  • § 9.5 : Defining Risk Transfer9-16
  • § 9.6 : Abuse of Finite Reinsurance9-17
    • § 9.6.1 : HIH Insurance Ltd.9-18
    • § 9.6.2 : Fortress Re9-20
    • § 9.6.3 : Reciprocal of America9-23
    • § 9.6.4 : AIG9-26
      • [A] : AIG and Brightpoint9-26
      • [B] : AIG and General Re9-29
  • § 9.7 : Regulatory Response9-30
  • § 9.8 : The Future of Finite9-32
Chapter 10: Synthetic Reinsurance
  • § 10.1 : Introduction10-1
    • § 10.1.1 : Definition10-1
    • § 10.1.2 : General Observation10-2
    • § 10.1.3 : Typology10-5
  • § 10.2 : Securitization of Insurance Risk; the Securitization Model10-5
    • § 10.2.1 : The Securitization Model Defined10-5
    • § 10.2.2 : Collateralized Debt Obligations (CDOs)10-6
    • § 10.2.3 : Contingent Surplus Notes (CSNs)10-8
    • § 10.2.4 : Catastrophe Bonds (Cat Bonds)10-9
  • § 10.3 : Financial Derivates and Insurance Risk; the Derivatives Model10-12
    • § 10.3.1 : The Derivatives Model Defined10-12
    • § 10.3.2 : Catastrophe Equity Puts (CatEPuts)10-13
    • § 10.3.3 : Catastrophe Futures Markets10-14
  • § 10.4 : Concluding Remarks10-17
  Table of Authorities
  Index

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