Insurance Journal (3rd Quarter 2021)

Guest Contribution
Riaz Hussain Khan Jadoon
Member Chartered Institute of Loss
Adjusters (UK),
Qayyum Pervez Malik
LLMIT (Lloyds & London Market),
Authorized Insurance Surveying Surveyor & Officer Loss (The Adjuster SECP), /
MBA Claims (UK), M.Com Investigator (Insurance)
Qayyum Executive Pervez Director Malik - Pakistan & Co. Inspection (Pvt) Ltd
Company Pvt. Ltd.
The Claims Control Clauses which
are often referred to as CCCs are
found in facultative reinsurances
where the direct Insurer (reinsured)
has a small or no retention. The
Reinsurers incorporate these clauses
t o g i v e t h e m c o n t r o l o v e r
investigation and settlement of claims
mostly where a specialized risk is
being insured or where the amount of
risk is substantial. The standard
wording of the Clause as per Market
form NMA 2738 (1/1/97) provides an
example of a CCC, as follows:
Quote
Notwithstanding anything to the
c o n t r a r y c o n t a i n e d i n t h i s
Reinsurance it is a condition
precedent to Reinsurers' liability
under the Reinsurance that:
Claims Control
Clauses from a
Surveyor's
Perspective
relating thereto as soon as reasonably
practicable.
(c) The Reinsurer(s) shall have the
right at any time to appoint adjusters
and/or representatives to act on their
behalf to control all investigations,
adjustments and settlements in
connection with any claim notified to
the Reinsurer(s) as aforesaid.
(d) The Reinsured shall co-operate
with the Reinsurer(s) and any other
person or persons designated by the
Reinsurer(s) in the investigation,
adjustment and settlement of such
claim.
Unquote
The requirements of Claims Control
Clauses in reinsurance arrangements
observed by the Insurers are almost
identical with Claims Conditions
Clauses in insurance arrangements
observed by the Insureds. Since
compliance with Claim Control
Clauses are condition precedent to
liability, therefore, the direct Insurer
must observe it for the Reinsurer's
Liability. The breach of a condition
precedent to liability would discharge
the Reinsurers from their Liability in
the same manner as Insurers treat their
Insureds in case of breach i.e. claim
repudiation. However, the burden of
proving a breach is on the reinsurer.
The Sub-clause (c) of the CCCs gives
the Reinsurer the right to appoint
Surveyor / Loss Adjusters at any time
to control all investigations,
(a) The Reinsured shall give to the
Reinsurer(s) written notice as so as
reasonably practicable of any claim
made against the Reinsured in respect
of the business reinsured hereby or of
i t s b e i n g n o t i f i e d o f a n y
circumstances which could give rise
to such a claim.
(b) The Reinsured shall furnish the
Reinsurer(s) with all information
known to the Reinsured in respect of
claims or possible claims notified in
accordance with (a) above and shall
thereafter keep the Reinsurer(s) fully
informed as regards all developments
Insurance Journal July, August, September 2021
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