INTERESTS AND LIABILITIES AGREEMENT
(hereinafter referred to as the "Agreement")
to the
SECOND CASUALTY CATASTROPHE EXCESS OF LOSS
------------------------------------------
REINSURANCE CONTRACT
--------------------
(hereinafter referred to as the "Contract")
between
SELECTIVE INSURANCE COMPANY OF AMERICA
SELECTIVE WAY INSURANCE COMPANY
SELECTIVE INSURANCE COMPANY OF THE SOUTHEAST
SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA
EXCHANGE INSURANCE COMPANY
(hereinafter referred to either individually or collectively as the
"Company")
and
(hereinafter referred to as the "Subscribing Reinsurer")
It is mutually agreed by and between the Company on the one part and the
Subscribing Reinsurer on the other part that the Subscribing Reinsurer's
share in the interests and liabilities of the Reinsurers as set forth inthe
Contract, to which this Agreement is attached, shall be for %.
The share of the Subscribing Reinsurer in the interests and liabilities of
the Reinsurers in respect of said Contract shall be separate and apart from
the shares of such other subscribing reinsurers, if any, to said Contract.
The interests and liabilities of the Subscribing Reinsurer shall not be joint
with those of such other subscribing reinsurers and in no event shall the
Subscribing Reinsurer participate in the interests and liabilities of such
other subscribing reinsurers.
This Agreement shall become effective commencing 12:01 a.m., Eastern Standard
Time, January 1,1996, in respect of business in force at such date or
business incepting, renewing or having an anniversary date on and after such
date, and shall remain in effect until 12:01 a.m., Eastern Standard Time,
January 1,1997.
Effective: January 1, 1996
3645-16/02
PAGE
The interests and liabilities of the Subscribing Reinsurer therein may not be
changed, altered and amended unless such change, alteration and amendment is
evidenced by Endorsement to this Agreement executed by the Company and the
Subscribing Reinsurer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives this 12th day of
April, 1996.
SELECTIVE INSURANCE COMPANY OF AMERICA
SELECTIVE WAY INSURANCE COMPANY
SELECTIVE INSURANCE COMPANY OF THE SOUTHEAST
SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA
EXCHANGE INSURANCE COMPANY
/s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Assistant Vice President
--------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and on this day of , 199__.
Effective: January 1, 1996
3645-16/02
PAGE
SECOND CASUALTY CATASTROPHE EXCESS OF LOSS
------------------------------------------
REINSURANCE CONTRACT
--------------------
TABLE OF CONTENTS
-----------------
Article Page
------- ----
Preamble 1
1 Business and Territory Covered 1
2 Commencement and Termination 2
3 Extended Expiration 2
4 Third Party Rights 3
5 Exclusions 3
6 Reinsuring Clause 7
7 Definitions 7
8 Warranties 9
9 Premium 9
10 Reinstatement of Limit 10
11 Net Retained Lines 10
12 Ultimate Net Loss 11
13 Excess of Original Policy Limits 12
14 Extra Contractual Obligations 12
15 Notice of Loss and Loss Settlements 13
16 Reinsurance Tax 13
17 Access to Records 14
18 Arbitration 14
19 Currency 15
20 Service of Suit 15
21 Federal Excise Tax 16
22 Loss Reserves 16
23 Indemnification and Errors and Omissions 18
24 Insolvency 18
25 Intermediary 19
Attachments
-----------
Nuclear Incident Exclusion Clause - Liability -
Reinsurance - U.S.A. 20
Nuclear Incident Exclusion Clause - Liability -
Reinsurance - Canada 25
Nuclear Incident Exclusion Clause - Physical Damage
and Liability (Boiler and Machinery Policies) -
Reinsurance - U.S.A. 28
Nuclear Incident Exclusion Clause - Physical Damage
and Liability (Boiler and Machinery Policies) -
Reinsurance - Canada 29
Nuclear Energy Risks Exclusion Clause (Reinsurance)
(1994) (Worldwide Excluding U.S.A. and Canada) 30
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3645-16/02
PAGE
SECOND CASUALTY CATASTROPHE EXCESS OF LOSS
------------------------------------------
REINSURANCE CONTRACT
--------------------
(hereinafter referred to as the "Contract")
In consideration of the mutual covenants hereinafter contained and upon the
terms and conditions hereinafter set forth
VARIOUS INSURANCE AND/OR REINSURANCE COMPANIES
----------------------------------------------
AND/OR UNDERWRITING MEMBERS OF LLOYD'S
--------------------------------------
(hereinafter referred to as the "Reinsurers")
one of whom is
THE "SUBSCRIBING REINSURER" WHOSE NAME
--------------------------------------
APPEARS ON THE INTERESTS AND LIABILITIES AGREEMENT
--------------------------------------------------
ATTACHING TO AND FORMING A PART OF THIS CONTRACT
------------------------------------------------
does hereby indemnify, as herein provided and specified,
SELECTIVE INSURANCE COMPANY OF AMERICA
SELECTIVE WAY INSURANCE COMPANY
SELECTIVE INSURANCE COMPANY OF THE SOUTHEAST
SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA
EXCHANGE INSURANCE COMPANY
(hereinafter referred to either individually or collectively as the
"Company")
ARTICLE 1
---------
BUSINESS AND TERRITORY COVERED
------------------------------
The Reinsurers shall indemnify the Company for the liability which may accrue
to the Company as a result of any damage, injury, disease, or loss covered
which takes place during the term of this Contract, whether covered under
policies, bonds, binders, contracts of insurance or reinsurance or under
other evidences of liability, whether oral or written, covering anywhere in
the world (hereinafter referred to as "policy" or "policies") heretofore or
hereafter issued, whether written separately or as part of any Multiple Peril
or similar types of policies and classified by the Company as Casualty
business including but not limited to:
A. Homeowners and Farmowners.
B. Business Owners.
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C. Commercial Multi-Peril (Section II only).
D. Workers' Compensation including Employers' Liability.
E. Automobile P.I.P. including Death and Dismemberment Medical
Payments.
F. Automobile Bodily Injury and Property Damage.
G. Collision Damage.
H. Personal and/or Bodily Injury including Medical Payments.
I. Property Damage Liability.
J. Automobile Liability.
K. General Liability.
L. Umbrella Liability.
ARTICLE 2
---------
COMMENCEMENT AND TERMINATION
----------------------------
This Contract shall become effective commencing 12:01 a.m., Eastern Standard
Time, January 1,1996, in respect of business in force at such date or
business incepting, renewing or having an anniversary date on and after such
date, and shall remain in effect until 12:01 a.m., Eastern Standard Time,
January 1,1997.
If any law or regulation of the federal, state or local government of any
jurisdiction in which the Company is doing business shall render illegal the
arrangements made in this Contract, the Contract can be terminated
immediately, insofar as it applies to such jurisdiction, by the Company
giving notice to the Reinsurers to such effect.
ARTICLE 3
---------
EXTENDED EXPIRATION
-------------------
If this Contract terminates while a loss covered hereunder is in progress, it
is agreed that, subject to the other conditions of this Contract, the Reinsurers
shall indemnify the Company as if the entire loss had occurred during the term
of this Contract, provided the loss covered hereunder started before the time
of termination.
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PAGE
ARTICLE 4
---------
THIRD PARTY RIGHTS
------------------
This Contract is solely between the Company and the Reinsurers, and in no
instance shall any other party have any rights under this Contract except as
expressly provided otherwise in Article 24, Insolvency.
ARTICLE 5
---------
EXCLUSIONS
----------
This Contract does not apply to and specifically excludes:
A. As respects Burglary and Theft:
1. Jewelers' Block policies;
2. Personal Property Floater policies;
3. Homeowners' and Farmowners' policies.
B. As respects Personal Injury Liability:
Advertisers', Broadcasters', and Telecasters' Liability.
C. As respects all other business covered hereunder:
1. Scheduled buses operating as common carriers.
2. Vehicles used by truckmen regularly engaged in the interstate
transportation of goods for others and operating beyond a 250 mile
radius but not to include intrastate transportation.
3. Regular retail newspaper delivery in towns of 500,000 population or
more.
4. Amusement parks or amusement devices when written as such.
5. Concerns engaged in the demolition of buildings more than three
stories in height, or vessels.
6. Products Liability for policies covering:
(a) Ethical Drugs;
(b) Proprietary Drugs;
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(c) Chemicals, other than Consumer Products;
(d) Beauty Preparations;
(e) Aviation Parts;
(f) Volatile Oils and Insecticides.
7. Professional Liability except as respects:
(a) Morticians;
(b) Druggists;
(c) Pastors;
(d) Printers;
(e) Veterinarians;
(f) Barbers and Beauticians;
(g) Optometrists, Opticians and Audiologists;
(h) Employee Benefits Administrators working for insureds whose
principal business is not the administration of employee
benefits for others;
(i) Volunteer Fire Companies and Rescue Squads for incidental
medical malpractice;
(j) Teachers and full-time school professionals;
(k) Cemeteries;
(l) Real Estate/Insurance Agents.
8. Directors' and Officers' Liability, except as respects Condominium
Owners Associations, Public Officials, Volunteer Fire Companies,
Emergency Medical Services, and Religious Institutions.
9. Errors and Omissions Insurance except for School Boards (when the
Company's limits subject to this Contract do not exceed
$1,000,000), Public Officials, Auto Dealers, Employee Benefits,
Volunteer Fire Companies, Volunteer Ambulance Squads, Teachers and
full-time school professionals.
10. Kidnap, ▇▇▇▇▇▇ and Extortion Insurance; except as respects
dishonest and fraudulent acts by employees of the insured under
Fidelity bonds which may be currently or subsequently covered
hereunder.
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11. Manufacture, production or refining of natural or artificial fuel,
gas, butane, propane or liquefied petroleum gases or gasoline.
12. Onshore and offshore gas and oil drilling operations.
13. Railroad operations, including street railways, excepting side
track agreement coverages.
14. All underground mining operations.
15. Aircraft or airports as respects coverage for all liability arising
out of ownership, maintenance or use of any aircraft or flight
operations.
16. Tunnel construction more than 50 feet in length.
17. Working or navigation of any vessel exceeding 25 tons or 100 feet
in length.
18. Manufacture of fireworks, fuses, nitroglycerine, celluloid and
pyroxylin.
19. Ocean Marine business and all forms of legal liability arising out
of the operations or navigation of ships or vessels, except as
respects yachts.
20. Pollution Liability losses including Automobile Liability related
to hauling of hazardous or waste material except as relates to
environmental coverage required by law.
21. Asbestos, defined as follows:
Bodily injury (including occupational disease) and/or property
damage liability arising from the manufacture, removal,
installation, storage, mining, handling or transportation of
asbestos if the insured's operations, at the time of policy
issuance, present a known asbestos exposure; however, this
exclusion shall not apply to the removal, installation, storage,
handling or transportation of asbestos if such removal,
installation, storage, handling or transportation is incidental to
the insured's overall operations.
The term "incidental" as used in this exclusion, is intended to
recognize the fact that certain insureds (such as, but not limited
to, plumbing, carpentry, etc. contractors) will infrequently, but
regularly encounter asbestos within the scope of their operations
even though their operations as such, do not involve the
manufacture, removal, installation, storage, mining, handling or
transportation of asbestos. This exclusion does not apply to such
"incidental" operations.
22. Tobacco related claims.
D. As respects Workers' Compensation:
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The exclusions stipulated in Section C. above and, in addition, the
following risks:
1. U.S. L & H and ▇▇▇▇▇ Act, unless there is an incidental exposure to
such operations;
2. Construction and/or maintenance of ▇▇▇▇▇▇ dams;
3. Operation of dry docks.
E. The exclusions set forth in Sections B., C. and D. shall not apply to
risks regularly engaged in other operations which involve only
incidental operations in any such exclusions.
F. Pools, Associations and Syndicates. Where the Company is required by
any regulatory authority to participate in any Assigned Risk Plan or
similar mandatory coverage plan covering a class or operation otherwise
excluded hereunder, the exclusion(s) shall not apply.
G. Liability excluded under the provisions of the following Nuclear Clauses
attaching to and forming a part of this Contract:
1. Nuclear Incident Exclusion Clause - Liability - Reinsurance -
U.S.A.;
2. Nuclear Incident Exclusion Clause - Liability - Reinsurance -
Canada;
3. Nuclear Incident Exclusion Clause - Physical Damage and Liability -
(Boiler and Machinery Policies) - Reinsurance - U.S.A.;
4. Nuclear Incident Exclusion Clause - Physical Damage and Liability -
(Boiler and Machinery Policies) - Reinsurance - Canada;
5. Nuclear Energy Risks Exclusion Clause (Reinsurance) (1994)
(Worldwide excluding U.S.A. & Canada).
H. 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.
I. Financial Guarantee and Insolvency.
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ARTICLE 6
---------
REINSURING CLAUSE
-----------------
As respects the Ultimate Net Loss, as defined in Article 12, Ultimate Net Loss,
of the Company arising out of each Loss Occurrence, as defined in Article 7,
Definitions, covered hereunder on which the Company has paid or advanced, or
agreed to pay or advance, or becomes liable to pay to or on behalf of its
insured(s) or reinsured(s), an amount exceeding $15,000,000 Ultimate Net Loss,
the Reinsurers shall pay or be liable to pay to the Company the amount the
excess of $15,000,000 Ultimate Net Loss in respect of each Loss Occurrence, but
the sum recoverable hereunder shall not exceed $10,000,000 in respect of each
such Loss Occurrence.
In respect of Occupational or other diseases and Cumulative Injury loss
-----------------------------------------------------------------------
The Reinsurers will pay to the Company in respect of loss or losses on
business the subject matter hereof the excess of the amount of
$15,000,000 of Aggregate net loss any one Policy Year, both as defined
in Article 7, Definitions, for each insured sustained by the Company
resulting from occupational or other diseases or Cumulative Injury
losses suffered by any one or more employees of each insured provided
the loss to the Reinsurers hereunder shall not exceed $10,000,000 of
Aggregate net loss any one Policy Year covered hereunder for each
insured.
ARTICLE 7
---------
DEFINITIONS
-----------
A. The term "Loss Occurrence", as used in this Contract, shall mean any one
disaster or casualty or accident or loss or series of disasters or
casualties or accidents or losses arising out of or caused by one event
except that:
1. As respects Property Damage Liability Insurance (other than
Automobile and Products but not excepting environmental coverage
required by law), said term shall also, subject to provisions (a)
and (b) below, be understood to mean loss or losses caused by a
series of operations, events or occurrences arising out of
operations at one specific site and which cannot be attributed to
any single one of such operations, events or occurrences but rather
to the cumulative effect of the same. In assessing each and every
Loss Occurrence within the foregoing definition, it is understood
and agreed that:
(a) the series of operations, events or occurrences shall not
extend over a period longer than 12 consecutive months; and
(b) the Company may elect the date on which the period of not
exceeding 12 consecutive months shall commence and which will
be considered the date of loss for purposes of this Contract.
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In the event that the series of operations, events or occurrences
extends over a period longer than 12 months, then each consecutive
period of 12 months, the first of which commences on the date
elected under provision (b) above, shall form the basis of claim
under this Contract.
2. As respects an occupational or other disease suffered by an
employee and for which the employer is liable, such occupational or
other disease shall be deemed a separate Loss Occurrence within the
meaning hereof. If the Company shall, within a Policy Year, as
defined in Section B. below, sustain a loss arising from
occupational or other disease(s) from the same common causative
agent suffered by more than one employee of one insured, such
losses shall be deemed to have arisen out of one Loss Occurrence,
and the date of loss for purposes of this Contract will be the
inception or anniversary date of the policy out of which the loss
arose. A loss as respects each employee affected by an
occupational or other disease shall be deemed to have been
sustained by the Company at the earlier of the date when
compensable disability of the employee commenced or the date
compensable medical attention commenced and at no other date.
3. As respects business when the cause of loss is the "neglect, error
or omission" of the insured, it is understood that such neglect,
error or omission shall be deemed to be a Loss Occurrence within
the meaning hereof. The date of such Loss Occurrence shall be the
date of loss as defined in the Company's original policy.
4. As respects Products Personal Injury and Products Property Damage
Liability Insurance, it is understood that injuries to all persons
and all damage to property of others occurring during a policy
period and proceeding from or traceable to the same causative
agency shall be deemed to have arisen out of one Loss Occurrence,
and the date of such Loss Occurrence shall be deemed to be the
commencement date of the policy period. For the purposes of this
provision, each annual period of a policy which continues in force
for more than one year shall be deemed to be a separate policy
period. The word "injuries", as used in this paragraph, includes
but is not limited to infection, contagion, poisoning or
contamination.
B. "Policy year" shall mean each separate original policy period of not
exceeding twelve months commencing at the inception, anniversary or
renewal date as of and from January 1,1996.
C. "Aggregate" shall mean Ultimate Net Loss, as defined in Article 12,
Ultimate Net Loss, occurring in the aggregate during any one Policy
Year, as defined in Section B. above.
D. The term "Gross Net Earned Premium Income" shall mean gross earned
premiums, less return premiums, cancellations and premiums paid for
reinsurances, recoveries under which would inure to the benefit of the
Reinsurers under this Contract.
Effective: January 1, 1996 8 of 32
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ARTICLE 8
---------
WARRANTIES
----------
A. It is warranted that the Company shall retain net for its own account
the primary $500,000 for Monoline General Liability, Comprehensive
General Liability, Commercial Multi-Line Package policies, and Personal
Multi-Line Package policies; $500,000 for Workers' Compensation,
Commercial Automobile Liability, and Personal Automobile Liability;
$500,000 for Personal Umbrella policies; and $100,000 for Commercial
Umbrella policies.
B. The maximum per person contribution to the Ultimate Net Loss, as defined
in Article 12, Ultimate Net Loss, with respect to Section 1 and Section
2 of Workers' Compensation business, including Statutory and Voluntary
Compensation, and statutory benefits payable under the ▇▇▇▇▇▇▇▇▇ and
Harbor Workers' Compensation Act, ▇▇▇▇▇ Act and Federal Employers'
Liability Act is $10,000,000 any one Loss Occurrence, as defined in
Article 7, Definitions.
C. The maximum amount of net (being net of facultative) liability each
policy written by the Company and subject to this Contract in respect of
each class of insurance shall be as follows:
1. Automobile Bodily Injury Liability $2,000,000
2. Personal or Bodily Injury Liability $2,000,000
(other than Automobile)
3. Property Damage Liability $1,000,000
(Automobile and other than Automobile)
4. Combined Single Limit Bodily Injury Liability $2,000,000
and Property Damage Liability policies
5. Collision Damage $2,000,000
6. Personal Umbrella Liability $5,000,000
7. Commercial Umbrella Liability $5,000,000
Notwithstanding the foregoing, Personal Injury Protection benefits under any
"No-fault" Auto policy are not subject to the above limitations.
ARTICLE 9
---------
PREMIUM
-------
A. The Company shall pay to the Reinsurers a reinsurance deposit premium of
$340,000, payable in installments of $85,000 at January 1, April 1, July
1 and October 1, 1996.
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B. As soon as practicable after the expiration of this Contract, the
Company shall furnish to the Reinsurers a statement of the actual
reinsurance premium due the Reinsurers and the reinsurance deposit
premium shall be adjusted at a rate of 0.067% of the Company's Gross Net
Earned Premium Income, as defined in Article 7, Definitions, accounted
for by the Company during the term of this Contract, on all business
which is the subject matter of this Contract. However, in no event
shall the final adjusted reinsurance premium be less than the minimum
premium of $340,000.
ARTICLE 10
----------
REINSTATEMENT OF LIMIT
----------------------
Each loss hereon reduces the amount of indemnity provided under this Contract
by the amount paid. Any amount so exhausted shall be automatically
reinstated from the time of the Loss Occurrence, as defined in Article 7,
Definitions.
The reinsurance limit provided in this Contract, as outlined in Article 6,
Reinsuring Clause, is subject to one (1) reinstatement. The reinstated limit
is in addition to the initial limit of this Contract.
For each amount so reinstated, the Company agrees to pay an additional
premium calculated at pro rata of the annual premium as respects the fraction
of indemnity exhausted and 100% of the annual premium regardless of the
unexpired term of this Contract. Nevertheless, the Reinsurers' liability
shall not exceed $10,000,000 with respect to any one Loss Occurrence and
shall not exceed $20,000,000 with respect to all losses arising during the
term of this Contract.
Reinstatement premiums are to be paid immediately after the claim to this
Contract has been paid.
ARTICLE 11
----------
NET RETAINED LINES
------------------
This Contract applies only to that portion of any insurance, reinsurance or
any Extra Contractual Obligations, as defined in Article 14, Extra
Contractual Obligations, which the Company retains net for its own account,
except as otherwise provided for in Article 12, Ultimate Net Loss. In
calculating the amount of any loss hereunder and also in computing the amount
or amounts in excess of which this Contract attaches, only loss or losses in
respect of that portion of any insurance, reinsurance or any Extra
Contractual Obligations which the Company retains net for its own account
shall be included.
The amount of the Reinsurers' liability hereunder in respect to any loss or
losses shall not be increased by reason of the inability of the Company to
collect from any other reinsurers whether
Effective: January 1, 1996 10 of 32
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specific or general any amounts which may have become due from them whether
such inability arises from the insolvency of such other reinsurers or
otherwise.
ARTICLE 12
----------
ULTIMATE NET LOSS
-----------------
The words "Ultimate Net Loss", mentioned in this Contract, shall mean the
actual loss paid or payable by the Company, and 90% Extra Contractual
Obligations, as defined in Article 14, Extra Contractual Obligations, and
losses in excess of original policy limits, as defined in Article 13, Excess
of Original Policy Limits, such loss to include expenses of litigation, if
any, and all other loss adjustment expenses of the Company, which include all
expenses arising from Declaratory Judgment Actions incurred in the
investigation adjustment, defense and litigation of claims under the terms of
and allocated to policies subject to this Contract (including a pro rata
share of salaries and expenses of the Company's employees including staff
counsel according to the time occupied in adjusting such loss and expenses of
the Company's officials incurred in connection with the loss, but salaries of
officials and any office expenses of the Company shall not be included);
salvages and recoveries including recoveries under all other reinsurances
whether collectible or not are to be first deducted from such loss to arrive
at the amount of liability, if any, attaching hereunder. Nothing, however,
in this Article shall be construed as meaning that losses are not recoverable
hereunder until the Ultimate Net Loss to the Company has been ascertained.
The Company shall retain the right to purchase excess of loss reinsurance
below the retention of this Contract. Recoveries from excess of loss
reinsurance shall inure to the sole benefit of the Company and any recoveries
from this excess of loss reinsurance shall be disregarded in computing the
Company's Ultimate Net Loss applicable to this Contract.
All salvages, recoveries and payments recovered or received subsequent to a
loss settlement under this Contract shall be applied as if recovered or
received prior to the said settlement and all necessary adjustments shall be
made by the parties hereto.
Whenever the Company issues a lost instrument bond or a lost instrument
letter of indemnity for salvage purposes or in lieu of loss payments under
its bond or policy, the Reinsurers agree to accept liability under such bond
or letter of indemnity in accordance with the terms of this Contract.
Effective: January 1, 1996 11 of 32
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ARTICLE 13
----------
EXCESS OF ORIGINAL POLICY LIMITS
--------------------------------
(Third Party Liability Business Only)
-------------------------------------
This Contract shall protect the Company, within the limits hereof, in
connection with Ultimate Net Loss, as defined in Article 12, Ultimate Net
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.
However, this Article shall not apply where the loss has been incurred due to
the fraud of 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.
For the purposes 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.
If any provision of this Article shall be rendered illegal or unenforceable
by the law, regulations, or public policy of any state, such provision shall
be considered void in such state, but this shall not affect the validity or
enforceability of any other provision of this Article, or the enforceability
of such provision in any other jurisdiction.
ARTICLE 14
----------
EXTRA CONTRACTUAL OBLIGATIONS
-----------------------------
This Contract shall protect the Company, within the limits hereof, where the
Ultimate Net Loss, as defined in Article 12, Ultimate Net Loss, includes any
Extra Contractual Obligations. "Extra Contractual Obligations" are defined
as those liabilities not covered under any other provision of this Contract
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.
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 loss
occurrence.
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Coverage provided under this Contract for Extra Contractual Obligations shall
be excess over coverage provided under any applicable in force claims made
Errors and Omissions insurance policy.
However, this Article shall not apply where the loss has been incurred due to
the fraud of 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.
If any provision of this Article shall be rendered illegal or unenforceable
by the law, regulations, or public policy of any state, such provision shall
be considered void in such state, but this shall not affect the validity or
enforceability of any other provision of this Article, or the enforceability
of such provision in any other jurisdiction.
ARTICLE 15
----------
NOTICE OF LOSS AND LOSS SETTLEMENTS
-----------------------------------
The Company shall give notice to the Reinsurers, as soon as reasonably
practicable, of any occurrence which results in or appears to be of serious
enough nature as probably to result in a loss involving this Contract, and
the Company shall keep the Reinsurers advised of all subsequent developments
in connection therewith.
The Reinsurers agree to abide by the loss settlements of the Company, such
settlements to be considered as satisfactory proof of loss. Amounts falling
to the share of the Reinsurers shall be immediately payable to the Company by
them upon reasonable evidence of the amount paid or to be paid by the Company
being presented to the Reinsurers by the Company.
ARTICLE 16
----------
REINSURANCE TAX
---------------
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.
Effective: January 1, 1996 13 of 32
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ARTICLE 17
----------
ACCESS TO RECORDS
-----------------
The Reinsurers or their duly designated representatives shall have access to
the books and records of the Company at all reasonable times for the purpose
of obtaining information concerning this Contract or the subject matter
thereof.
ARTICLE 18
----------
ARBITRATION
-----------
As a precedent to any right of action hereunder, if any dispute shall arise
between the parties to this Contract with reference to the interpretation of
this Contract or their rights with respect to any transaction involved,
whether such dispute arises before or after termination of this Contract,
such dispute, upon the written request of either party, shall be submitted to
three arbitrators, one to 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 days after the receipt of written notice from the other party
requesting it to do so, the requesting party may appoint two arbitrators. If
the two arbitrators fail to agree in the selection of a third arbitrator
within thirty days of their appointment, each of them shall name three, of
whom the other shall decline two and the decision shall be made by drawing
lots. All arbitrators shall be executive officers of insurance or
reinsurance companies or Underwriters at Lloyd's, London not under the
control of either party to this Contract.
The arbitrators shall interpret this Contract as an honorable engagement and
not as merely a legal obligation; they are relieved of all judicial
formalities and may abstain from following the strict rules of law, and they
shall make their award with a view to effecting the general purpose of this
Contract in a reasonable manner rather than in accordance with a literal
interpretation of the language. Each party shall submit its case to its
arbitrator within thirty days of the appointment of the third arbitrator.
The decision in writing of any two arbitrators, when filed with the parties
hereto, shall be final and binding on both parties. Judgement may be entered
upon the award of the board in any court having jurisdiction thereof. The
expense of the arbitrators and of the arbitration shall be equally divided
between the two parties. Said arbitration shall take place in the city in
which the Company's Head Office is located unless some other place is
mutually agreed upon by the parties to this Contract.
Effective: January 1, 1996 14 of 32
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PAGE
ARTICLE 19
----------
CURRENCY
--------
Wherever the word "dollars" or the sign "$" appears in this Contract, it
shall mean United States dollars.
For the purpose of this Contract, transactions and settlements on policies
written or assumed by the Company in other than United States currency shall
be converted into United States dollars at the rates of exchange at which
they are entered in the Company's books at its head office.
ARTICLE 20
----------
SERVICE OF SUIT
---------------
(This Article applies only to those Reinsurers not domiciled in the United
States of America, and/or not authorized in any state, territory and/or
district of the United States where authorization is required by insurance
regulatory authorities.)
It is agreed that in the event of the failure of the Reinsurers to pay any
amount claimed to be due under this Contract, the Reinsurers, at the request
of the Company, will submit to the jurisdiction of any court of competent
jurisdiction within the United States of America and will comply with all
requirements necessary to give such court jurisdiction; and all matters
arising hereunder shall be determined in accordance with the law and practice
of such court. Nothing in this Article constitutes or should be understood to
constitute a waiver of the Reinsurers' rights to commence an action in any
court of competent jurisdiction in the United States, to remove an action to
a United States District Court, or to seek a transfer of a case to another
court as permitted by the laws of the United States or of any state in the
United States.
Service of process in such suit may be made upon Mendes and Mount, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (hereinafter, "agent for
service of process") and in any suit instituted against any Reinsurer(s) upon
this Contract, the Reinsurer(s) will abide by the final decision of such
court or of any appellate court in the event of an appeal.
The above named are authorized and directed to accept service of process on
behalf of the Reinsurers in any such suit and/or upon the request of the
Company to give a written undertaking to the Company that the agent for
service of process will enter a general appearance on behalf of the
Reinsurers in the event such a suit shall be instituted.
Further, pursuant to any statute of any state, territory or district of the
United States of America which makes provision therefor, the Reinsurers
hereby designate the Superintendent, Commissioner or Director of Insurance or
other officer specified for that purpose in the statute, or his successor or
successors in office, as their true and lawful attorney upon whom may be
served any lawful process in any action, suit or proceeding instituted by or
on behalf of the
Effective: January 1, 1996 15 of 32
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PAGE
Company or any beneficiary hereunder arising out of this Contract and hereby
designate the agent for service of process as the firm to whom the said
officer is authorized to mail such process or a true copy thereof.
ARTICLE 21
----------
FEDERAL EXCISE TAX
------------------
(This Article applies only to those Reinsurers excepting Reinsurers at
Lloyd's, London and other Reinsurers exempt from the Federal Excise Tax, who
are domiciled outside the United States of America.)
The Reinsurers have agreed to allow for the purpose of paying the statutorily
prescribed Federal Excise Tax of the premium payable hereon to the extent
such premium is subject to Federal Excise Tax.
In the event of any return of premium becoming due hereunder, the Reinsurers
will deduct the statutorily prescribed percentage from the amount of the
return and the Company or its agent should take steps to recover the Tax from
the U.S. Government.
ARTICLE 22
----------
LOSS RESERVES
-------------
(This Article applies to those Reinsurers who do not qualify for credit by
any state or any other governmental authority having jurisdiction over the
Company's loss reserves.)
A: Where a Letter of Credit Trust Agreement is used, the following clause
shall apply:
It is agreed that when the Company files with the Insurance Department
or establishes reserves for claims covered hereunder, as required by
law, the Company will forward to the Reinsurers a statement showing the
proportion of such loss reserves which is applicable to the Reinsurers.
The Reinsurers hereby agree to apply for and secure delivery to the
Company of a clean, irrevocable and unconditional Letter of Credit, with
a minimum term of one year, that is issued or confirmed, and presentable
and payable in the United States by any bank or trust company, and is in
a format acceptable to the governmental authority having jurisdiction
over the Company's loss reserves in an amount equal to the Reinsurers'
proportion of said loss reserves.
The Company and the Reinsurers agree that such Letter of Credit will be
subject to the terms of a separate Letter of Credit Trust Agreement, and
that said trust agreement shall be in a form acceptable to the
governmental authority having jurisdiction over the Company's loss
reserves.
Effective: January 1, 1996 16 of 32
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PAGE
The designated 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 see that withdrawals are made
only upon the order of properly authorized representatives of the
Company.
B: Where a Letter of Credit Trust Agreement is not used, the following
clause shall apply:
It is agreed that when the Company files with the Insurance Department
or establishes reserves for claims covered under this Contract, as
required by law, the Company will forward to the Reinsurers a statement
showing the proportion of such loss reserves which is applicable to the
Reinsurers. The Reinsurers hereby agree to apply for and secure
delivery to the Company of a clean, irrevocable and unconditional Letter
of Credit, with a minimum term of one year, that is issued or confirmed,
and presentable and payable in the United States by any bank or trust
company, and is in a format acceptable to the governmental authority
having jurisdiction over the Company's loss reserves in an amount equal
to the Reinsurers' proportion of said loss reserves.
The Company and the Reinsurers agree that the Letter of Credit provided
by the Reinsurers under this provision may be drawn upon at any time,
notwithstanding any other provisions in this Contract, 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 such insurer for the following purposes:
1. to reimburse the Company for the Reinsurers' share of surrenders
and benefits or losses paid by the Company under the terms and
provisions of the policies reinsured under this Contract,
2. to fund an account with the Company in an amount at least equal to
the deduction, for reinsurance ceded, from the Company's
liabilities for policies ceded under this Contract. Such amount
shall include, but not be limited to, amounts for policy reserves,
reserves for claims and losses incurred (including losses incurred
but not reported), and loss adjustment expenses,
3. to pay any other amounts the Company claims are due under this
Contract,
4. to return any amounts drawn down on Letters of Credit in excess of
the actual amounts required for 1. and 2. above, or in case of 3.
above, any amounts which are subsequently determined not to be due.
All of the foregoing should be applied without diminution because of
insolvency on the part of the Company or the Reinsurers.
The designated 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 see that withdrawals are made
only upon the order of properly authorized representatives of the
Company.
Effective: January 1, 1996 17 of 32
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PAGE
ARTICLE 23
----------
INDEMNIFICATION AND ERRORS AND OMISSIONS
----------------------------------------
Any recitals in this Contract of the terms and provisions of any original
insurance or reinsurance are merely descriptive. The Reinsurers are
reinsuring, to the amount herein provided, the obligations of the Company
under any original insurance or reinsurance. The Company shall be the sole
judge as to:
A. what shall constitute a claim or loss covered under any original
insurance or reinsurance of the Company;
B. the Company's liability thereunder;
C. the amount or amounts which it shall be proper for the Company to
pay thereunder.
The Reinsurers shall be bound by the judgement of the Company as to the
obligation(s) and liability(ies) of the Company under any original insurance
or reinsurance, subject to the terms and conditions of this Contract.
Any inadvertent error, omission or delay in complying with the terms and
conditions of this Contract shall not be held to relieve either party hereto
from any liability which would attach to it hereunder if such error, omission
or delay had not been made, provided such error, omission or delay is
rectified immediately upon discovery.
ARTICLE 24
----------
INSOLVENCY
----------
In the event of the insolvency of the Company, this reinsurance shall be
payable directly to the Company, or to its liquidator, receiver, conservator
or statutory successor on the basis of the liability of the Company without
diminution because of the insolvency of the Company or because the
liquidator, receiver, conservator or statutory successor of the Company has
failed to pay all or a portion of any claim. It is agreed, however, that the
liquidator, receiver, conservator or statutory successor of the Company shall
give written notice to the Reinsurers of the pendency of a claim against the
Company indicating the policy or bond reinsured, which claim would involve a
possible liability on the part of the Reinsurers within a reasonable time
after such claim is filed in the conservation or liquidation proceeding or in
the receivership, and that during the pendency of such claim, the Reinsurers
may investigate such claim and interpose, at their own expense, in the
proceeding where such claim is to be adjudicated any defense or defenses that
they may deem available to the Company or its liquidator, receiver,
conservator or statutory successor. The expense thus incurred by the
Reinsurers shall be chargeable, subject to the approval of the court, against
the Company as part of the expense of conservation or liquidation to the
extent of a pro
Effective: January 1, 1996 18 of 32
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PAGE
rata share of the benefit which may accrue to the Company solely as a result
of the defense undertaken by the Reinsurers.
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 the reinsurance Contract as
though such expense had been incurred by the Company.
As to all reinsurance made, ceded, renewed or otherwise becoming effective
under this Contract, the reinsurance shall be payable as set forth above by
the Reinsurers to the Company or to its liquidator, receiver, conservator or
statutory successor, except as provided by Sections 4118(a)(1)(A) and 1114(c)
of the New York Insurance Law or except (1) where the Contract specifically
provides another payee in the event of the insolvency of the Company, and (2)
where the Reinsurers, with the consent of the direct insured or insureds,
have assumed such policy obligations of the Company as direct obligations of
the Reinsurers to the payees under such policies and in substitution for the
obligations of the Company to such payees. Then, and in that event only, the
Company, with the prior approval of the certificate of assumption on New York
risks by the Superintendent of Insurance of the State of New York, is
entirely released from its obligation and the Reinsurers pay any loss
directly to payees under such policy.
Should any party hereto be placed in rehabilitation or liquidation or should
a rehabilitator, liquidator, receiver, conservator or other person or entity
of similar capacity be appointed as respects such party, all amounts due any
of the parties hereto whether by reason of premiums, losses or otherwise
under this Contract or any other contract(s) of reinsurance heretofore or
hereafter entered into between the parties (whether or not any such
contract(s) be assumed or ceded) shall at all times be subject to the right
of offset at any time and from time to time, and upon the exercise of same,
only the net balance shall be due and payable in accordance with Section 7427
of the Insurance Law of the State of New York to the extent such statute or
any other applicable law, statute or regulation governing such offset shall
apply.
ARTICLE 25
----------
INTERMEDIARY
------------
▇▇▇ ▇▇▇▇▇▇▇▇▇ & Company, Inc. is hereby recognized as the Intermediary
negotiating this Contract for all business hereunder. All communications
(including but not limited to notices, statement, premiums, return premiums,
commissions, taxes, losses, loss adjustment expenses, salvages, and loss
settlements) relating thereto shall be transmitted to the Company or the
Reinsurers through ▇▇▇ ▇▇▇▇▇▇▇▇▇ & Company, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. 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.
Effective: January 1, 1996 19 of 32
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PAGE
Nuclear Incident Exclusion Clause - Liability - Reinsurance - U.S.A.
--------------------------------------------------------------------
(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, to
INJURY, SICKNESS, DISEASE, DEATH OR DESTRUCTION
bodily injury or property damage
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.
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 having
jurisdiction thereof.
Effective: January 1, 1996 20 of 32
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PAGE
(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:
I. 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 States of America, or any agency thereof, with any
person or organization.
II. Under any Medical Payments Coverage, or under any Supplementary
Payments Provision relating to
IMMEDIATE MEDICAL OR SURGICAL RELIEF
first aid,
to expenses incurred with respect to
Effective: January 1, 1996 21 of 32
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PAGE
BODILY INJURY, SICKNESS, DISEASE OR DEATH
bodily injury
resulting from the hazardous properties of nuclear material and
arising out of the operation of a nuclear facility by any person or
organization.
III. Under any Liability Coverage, to
INJURY, SICKNESS, DISEASE, DEATH OR 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
(c) the
INJURY, SICKNESS, DISEASE, DEATH OR DESTRUCTION
bodily injury or property damage
arises out of 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, but if such facility is located within the United
States of America, its territories or possessions or Canada,
this exclusion (c) applies only to
INJURY TO OR DESTRUCTION OF PROPERTY AT SUCH NUCLEAR
FACILITY.
property damage to such nuclear facility and any property
threat.
IV. As used in this endorsement:
"hazardous properties" include radioactive, toxic or explosive
properties; "nuclear material" means source material, special
nuclear material or byproduct material; "source material", "special
nuclear material", and "byproduct 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
byproduct material other than the tailings or wastes produced by
the extraction or concentration of uranium or thorium from any ore
processed
Effective: January 1, 1996 22 of 32
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PAGE
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 ▇▇▇▇▇▇▇▇ ▇▇▇▇ of fissionable material;
WITH RESPECT TO INJURY TO OR DESTRUCTION OF PROPERTY, THE WORD
"INJURY" OR "DESTRUCTION" includes all forms of radioactive
contamination of property.
"property damage" 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.
Effective: January 1, 1996 23 of 32
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PAGE
-----------------------------------------------------------------------------
*NOTE. The words printed in "ALL CAPITAL LETTERS" in the Limited Exclusion
Provision and 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.
-----------------------------------------------------------------------------
21/9/67
NMA 1590 (amended)
-----------------------------------------------------------------------------
NOTES: Wherever used herein the terms:
"Reassured" shall be understood to mean "Company", "Reinsured",
"Reassured" or whatever other term is used in the
attached reinsurance document to designate the
reinsured company or companies.
"Agreement" shall be understood to mean "Agreement", "Contract",
"Policy" or whatever other term is used to designate
the attached reinsurance document.
"Reinsurers" shall be understood to mean "Reinsurers",
"Underwriters" or whatever other term is used in the
attached reinsurance document to designate the
reinsurer or reinsurers.
Effective: January 1, 1996 24 of 32
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PAGE
Nuclear Incident Exclusion Clause - Liability - Reinsurance - Canada
--------------------------------------------------------------------
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 agreed that for all purposes of this Reinsurance all the
original liability contracts of the Reassured, 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 an 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 limit 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 Reinsurance all the
original liability contracts of the Reassured, 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
Effective: January 1, 1996 25 of 32
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PAGE
(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:
(i) the ownership, maintenance, operation or use of a nuclear
facility by or on behalf of an Insured;
(ii) 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
(iii)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 usable for any
scientific, medical, agricultural, commercial or
industrial purpose) used, distributed, handled or sold by
an Insured.
As used in this Policy:
----------------------
1. The term "nuclear energy hazard" means the radioactive, toxic, explosive
or other hazardous properties of radioactive material;
2. 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;
3. 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇ 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,
Effective: January 1, 1996 26 of 32
3645-16/02
PAGE
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.
4. 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.
5. With respect to property, loss of use of such property shall be deemed
to be property damage.
NMA 1979
(11/10/84)
-----------------------------------------------------------------------------
NOTES: Wherever used herein the terms:
"Reassured" shall be understood to mean "Company", "Reinsured",
"Reassured" or whatever other term is used in the
attached reinsurance document to designate the
reinsured company or companies.
"Agreement" shall be understood to mean "Agreement", "Contract",
"Policy" or whatever other term is used to designate
the attached reinsurance document.
"Reinsurers" shall be understood to mean "Reinsurers",
"Underwriters" or whatever other term is used in the
attached reinsurance document to designate the
reinsurer or reinsurers.
Effective: January 1, 1996 27 of 32
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PAGE
Nuclear Incident Exclusion Clause - Physical Damage and Liability (Boiler
-------------------------------------------------------------------------
and Machinery Policies) - Reinsurance - U.S.A.
---------------------------------------------
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 original Boiler and Machinery Insurance or Reinsurance
contracts of the Reassured shall be deemed to include the following
provisions of this paragraph:
This Policy does not apply to "loss", whether it be direct or
indirect, proximate or remote
(a) from an Accident caused directly or indirectly by nuclear
reaction, nuclear radiation or radioactive contamination, all
whether controlled or uncontrolled; or
(b) from nuclear reaction, nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, caused
directly or indirectly by, contributed to or aggravated by an
Accident.
3. However, it is agreed that loss arising out of the use of Radioactive
Isotopes in any form is not hereby excluded from reinsurance protection.
-----------------------------------------------------------------------------
NOTES: Wherever used herein the terms:
"Reassured" shall be understood to mean "Company", "Reinsured",
"Reassured" or whatever other term is used in the
attached reinsurance document to designate the
reinsured company or companies.
"Agreement" shall be understood to mean "Agreement", "Contract",
"Policy" or whatever other term is used to designate
the attached reinsurance document.
"Reinsurers" shall be understood to mean "Reinsurers",
"Underwriters" or whatever other term is used in the
attached reinsurance document to designate the
reinsurer or reinsurers.
23/6/58
NMA 1166
Effective: January 1, 1996 28 of 32
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PAGE
Nuclear Incident Exclusion Clause - Physical Damage and Liability (Boiler
-------------------------------------------------------------------------
and Machinery Policies) - Reinsurance - Canada
----------------------------------------------
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 original Boiler and Machinery Insurance or Reinsurance
contracts of the Reassured shall be deemed to include the following
provisions of this paragraph;
This Policy does not apply to loss, whether it be direct or
indirect, proximate or remote
(a) from an Accident caused directly or indirectly by nuclear
reaction, nuclear radiation or radioactive contamination, all
whether controlled or uncontrolled; or
(b) from nuclear reaction, nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, caused
directly or indirectly by, contributed to or aggravated by an
Accident.
3. However, it is agreed that loss arising out of the use of Radioactive
Isotopes in any form is not hereby excluded from reinsurance protection.
4. Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that policies issued by the Reassured effective
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,
1961, whichever first occurs, whereupon all the provisions of this
Clause shall apply.
-----------------------------------------------------------------------------
NOTES: Wherever used herein the terms:
"Reassured" shall be understood to mean "Company", "Reinsured",
"Reassured" or whatever other term is used in the
attached reinsurance document to designate the
reinsured company or companies.
"Agreement" shall be understood to mean "Agreement", "Contract",
"Policy" or whatever other term is used to designate
the attached reinsurance document.
"Reinsurers" shall be understood to mean "Reinsurers",
"Underwriters" or whatever other term is used in the
attached reinsurance document to designate the
reinsurer or reinsurers.
29/10/59
NMA 1251
Effective: January 1, 1996 29 of 32
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PAGE
Nuclear Energy Risks Exclusion Clause (Reinsurance) (1994) (Worldwide
---------------------------------------------------------------------
Excluding U.S.A. and Canada)
----------------------------
This Agreement shall exclude Nuclear Energy Risks whether such risks are
written directly and/or by way of reinsurance and/or via Pools and/or
Associations.
For all purposes of this Agreement Nuclear Energy Risks shall mean all first
party and/or third party insurances or reinsurances (other than Workers'
Compensation and Employers' Liability) in respect of:
(I) All Property on the site of a nuclear power station.
Nuclear Reactors, reactor buildings and plant and equipment therein
on any site other than a nuclear power station.
(II) All Property, on any site (including but not limited to the sites
referred to in (I) above) used or having been used for:
(a) the generation of nuclear energy; or
(b) the Production, Use or Storage of Nuclear Material.
(III)Any other Property eligible for insurance by the relevant local
Nuclear Insurance Pool and/or Association but only to the extent of
the requirements of that local Pool and/or Association.
(IV) The supply of goods and services to any of the sites, described in
(I) to (III) above, unless such insurances or reinsurances shall
exclude the perils of irradiation and contamination by Nuclear
Material.
Except as undernoted, Nuclear Energy Risks shall not include:
(i) Any insurance or reinsurance in respect of the construction or
erection or installation or replacement or repair or maintenance or
decommissioning of Property as described in (I) to (III) above
(including contractors' plant and equipment);
(ii) Any Machinery Breakdown or other Engineering insurance or
reinsurance not coming within the scope of (i) above.
Provided always that such insurance or reinsurance shall exclude the perils
of irradiation and contamination by Nuclear Material.
However, the above exemption shall not extend to:
(1) The provision of any insurance or reinsurance whatsoever in respect
of:
Effective: January 1, 1996 30 of 32
3645-16/02
PAGE
(a) Nuclear Material;
(b) Any Property in the High Radioactivity Zone or Area of any
Nuclear Installation as from the introduction of Nuclear
Material or - for reactor installations - as from fuel loading
or first criticality where so agreed with the relevant local
Nuclear Insurance Pool and/or Association.
(2) The provision of any insurance or reinsurance for the undernoted
perils:
- fire, lightning, explosion;
- earthquake;
- aircraft and other aerial devices or
articles dropped therefrom;
- irradiation and radioactive contamination;
- any other peril insured by the relevant
local Nuclear Insurance Pool and/or Association;
in respect of any other Property not specified in (1) above which
directly involves the Production, Use or Storage of Nuclear
Material as from the introduction of Nuclear Material into such
Property.
Definitions
-----------
"Nuclear Material" means:
(i) Nuclear fuel, other than natural uranium and depleted uranium,
capable of producing energy by a self-sustaining chain process
of nuclear fission outside a Nuclear Reactor, either alone or
in combination with some other material; and
(ii) Radioactive Products or Waste.
"Radioactive Products or Waste" means any radioactive material produced
in, or any material made radioactive by exposure to the radiation
incidental to the production or utilization of nuclear fuel, but does
not include radioisotopes which have reached the final stage of
fabrication so as to be usable for any scientific, medical,
agricultural, commercial or industrial purpose.
"Nuclear Installation" means:
(i) Any Nuclear Reactor;
(ii) Any factory using nuclear fuel for the production of Nuclear
Material, or any factory for the processing of Nuclear
Material, including any factory for the reprocessing of
irradiated nuclear fuel; and
Effective: January 1, 1996 31 of 32
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PAGE
(iii)Any facility where Nuclear Material is stored, other than
storage incidental to the carriage of such material.
"Nuclear Reactor" means any structure containing nuclear fuel in such an
arrangement that a self-sustaining chain process of nuclear fission can
occur therein without an additional source of neutrons.
"Production, Use or Storage of Nuclear Material" means the production,
manufacture, enrichment, conditioning, processing, reprocessing, use,
storage, handling and disposal of Nuclear Material.
"Property" shall mean all land, buildings, structures, plant, equipment,
vehicles, contents (including but not limited to liquids and gases) and
all materials of whatever description whether fixed or not.
"High Radioactivity Zone or Area" means:
(i) For nuclear power stations and Nuclear Reactors, the vessel or
structure which immediately contains the core (including its
supports and shrouding) and all the contents thereof, the fuel
elements, the control rods and the irradiated fuel store; and
(ii) For non-reactor Nuclear Installations, any area where the
level of radioactivity requires the provision of a biological
shield.
N.M.A. 1975(a)
April 1, 1994
-----------------------------------------------------------------------------
NOTES: Wherever used herein the terms:
"Reassured" shall be understood to mean "Company", "Reinsured",
"Reassured" or whatever other term is used in the
attached reinsurance document to designate the
reinsured company or companies.
"Agreement" shall be understood to mean "Agreement", "Contract",
"Policy" or whatever other term is used to designate
the attached reinsurance document.
"Reinsurers" shall be understood to mean "Reinsurers",
"Underwriters" or whatever other term is used in the
attached reinsurance document to designate the
reinsurer or reinsurers.
Effective: January 1, 1996 32 of 32
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PAGE
SUMMARY OF CHANGES
------------------
to the
SELECTIVE INSURANCE GROUP
-------------------------
SECOND CASUALTY CATASTROPHE EXCESS OF LOSS PROGRAM
--------------------------------------------------
This Contract commencing at January 1, 1996 differs from the previous
Contract in the following manner:
1. Throughout the Contract, all dates, rates, and premium amounts have been
amended to reflect the terms of the firm order.
2. Throughout the Contract, all references to "Agreement","Contract",
"Company", and "Reinsurers" have been amended to read "the Agreement",
"the Contract", "the Company", "the Reinsurers", and "the Subscribing
Reinsurer" (in the Interests and Liabilities Agreement), to correct
grammatical errors. Also, cross references to other Articles have been
added and editorial corrections (such as capitalization) have been made.
3. Throughout the Contract, all major sections and subsections have been
renamed to appear in the following order for the sake of consistency:
A., 1., (a), (i).
4. Preamble; Has been amended to follow the language contained in all
other Selective Insurance Group Contracts. The Company name has been
amended to delete any references to Charleston Insurance Company.
5. Article 1, Business and Territory Covered; The first sentence has been
amended to replace the phrase "This Contract shall indemnify..." with
the phrase "The Reinsurers shall indemnify".
6. Article 3, Extended Expiration; Has been amended to read "If this
Contract terminates" rather than "If this Contract shall terminate".
7. Article 5, Exclusions; Section G. has been amended for the sake of
clarity.
8. Article 6, Reinsuring Clause; The definitions of "Policy Year" and
"Aggregate" have been moved to Article 7.
9. Article 7, Definitions; Has been amended to include the definitions of
"Policy Year", "Aggregate" and "Gross Net Earned Premium Income".
10. Article 8, Warranties; Section C has been amended to read "net (being
net of facultative) liability each policy written by the Company" and
the phrase "in respect of each class of insurance" has been deleted, and
the maximum net liability for Commercial Umbrella Liability has been
amended to read "$5,000,000".
PAGE
11. Article 9, Premium; The definition of "Gross Net Earned Premium Income"
has been moved to Article 7.
12. Article 10, Reinstatement; This Article has been reworded to follow the
language of all other Selective Insurance Group Contracts.
13. Article 12, Ultimate Net Loss; The first paragraph has been amended to
include reference to coverage provided for losses in excess of original
policy limits, and the phrase "Company's field employees" has been
replaced with "Company's employees including staff counsel".
14. Article 15, Notice of Loss and Loss Settlements; This Article has been
reworded to follow the language of all other Selective Insurance Group
Contracts.
15. Article 20, Service of Suit; The zip code of Mendes and Mount has been
corrected.
16. Nuclear Incident Exclusion Clause - Liability - Reinsurance - U.S.A.;
minor editorial changes have been made to correctly reflect the language
contained in the London Market NMA 1590 (amended).