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Strima cONFERENCE

Strima cONFERENCE. September 19, 2011 Edward J. Ryan Vice President Reinsurance Division, Claims Munich Reinsurance America, Inc. Overview and Objectives. Introduction to Reinsurance Property Per Risk Reinsurance Catastrophe Reinsurance Reinsurance vs. Primary/Excess Insurance

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Strima cONFERENCE

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  1. StrimacONFERENCE September 19, 2011 Edward J. Ryan Vice President Reinsurance Division, Claims Munich Reinsurance America, Inc.

  2. Overview and Objectives Introduction to Reinsurance • Property Per Risk Reinsurance • Catastrophe Reinsurance Reinsurance vs. Primary/Excess Insurance • Right To Associate vs. Obligation to Investigate • Follow the Fortunes • “Lead” Carrier Concept • Method of Dispute Resolution Captives

  3. Overview and Objectives Adjustment Process and Potential Issues • Named Adjusters • Vendors and Their Purposes • Communication • Coverage Issues • Payments

  4. Per Risk Treaty Clauses and Concepts Property Per Risk Reinsurance • Definition of Risk • Ceding Company as Sole Judge of What Constitutes Risk • Obligation to Cede Consistent With Underwriting • Per Occurrence Limits • Loss Notices and Reporting • Company Obligation to Report “Promptly” • Property Loss Reporting Criteria • Property vs. Casualty Criteria

  5. Per Risk Treaty Clauses and Concepts Opportunity To Associate • It is understood that when so requested the Company will afford the Reinsurer an opportunity to be associated with the Company at the expense of the Reinsurer in the defense or control of any claim or suit or proceeding involving this reinsurance • Usually found under the Claims Clause Arbitration Clause • Any dispute arising out of the interpretation, performance or breach of this Contract, including the formation or validity thereof, shall be submitted for decision to a panel of three arbitrators

  6. Catastrophe Treaty Features Catastrophe Treaty Features • Two Risk Warranty • It is warranted that two or more separate risks must be involved in and contribute to the same loss occurrence before any claim may be made under this Agreement for the said loss occurrence. The Company shall be the sole judge of what constitutes one risk. • 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. • Company election for date “loss occurrence” commences • Hours Clauses by Peril

  7. Catastrophe Treaty Features Ultimate Net Loss • shall mean the sum actually paid by the Company in settlement of losses for which it is liable, including Allocated Loss Adjustment Expenses, as defined below… • May include Extra Contractual Obligations and/or Ex-Gratia • Should provide for deductions of all recoveries, including all other reinsurance • State funds (FHCF) considered as inuring reinsurance • Allocated Loss Adjustment Expenses as defined

  8. Reinsurance vs. Primary/Excess Claim Handling Reinsurer • No duty to investigate underlying claim – right to associate • Follow the Fortunes Primary Carrier • Obligation to conduct Good Faith investigation • Requirement for their own reinsurance recovery • Expenses Excess Carrier • Duty to investigate when primary exhausted • Right to make separate coverage determination

  9. Reinsurance vs. Primary/Excess Claim Handling “Lead” Carrier Concept • Custom and practice in London Market • Not binding on US Carriers, absent specific policy language Method of Dispute Resolution • Arbitration clause in reinsurance treaty • Appraisal • Suit • Alternate Dispute Resolution

  10. Adjustment Process and Potential Issues Named Adjusters • Program adjuster vs. co-adjuster Vendors • Construction consultants • Engineers • Cause of loss verification and/or repairability • Code expertise • Accountants • Salvors • Mold Remediation • Counsel

  11. Adjustment Process and Potential Issues Communication • Team meetings • Joint inspections Coverage Issues • Insured’s duties in event of loss • Protect property from further loss or damage • Furnish complete inventory of lost, damaged and destroyed property showing in detail the quantities, costs, actual cash value, replacement cost and amount of loss claimed • Submit signed and sworn proof of loss

  12. Adjustment Process and Potential Issues Coverage Issues – continued • Non-concurrent terms • Flood vs. Wind reinsurance example • Sub-limits • Deductibles • Percentage of TIV • Hurricane deductibles • Reservation of Rights

  13. Adjustment Process and Potential Issues Payments • Advance payments • Extra Expense • Undisputed damages • Bid Process • Emergency provisions Payees and Banking Instructions

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