COMMUTATION (RECAPTURE) Sample Clauses
The COMMUTATION (RECAPTURE) clause allows parties in a reinsurance or insurance agreement to settle all future obligations by making a lump-sum payment, effectively terminating the contract with respect to the covered risks. In practice, this means that instead of continuing to pay claims as they arise, the reinsurer or insurer and the cedent agree on a final amount that covers all potential future liabilities, after which the reinsurer or insurer is released from further responsibility. This clause is primarily used to simplify administration, eliminate uncertainty over future claims, and provide financial closure for both parties.
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COMMUTATION (RECAPTURE). By mutual agreement, the Company and the Reinsurer may commute this Agreement at any December 31, beginning December 31, 2007. In the event of such commutation, the Reinsurer’s sole liability shall be to pay to the Company an amount to be mutually agreed by the Company and the Reinsurer. If the Company and the Reinsurer cannot mutually agree on such amount, this Agreement will not be commuted. Commutation by the Company and the payment of the agreed amount by the Reinsurer shall constitute a complete and final release of the Reinsurer in respect of any and all known and unknown obligations or liability of any nature to the Company under or related to this Agreement. Upon commutation, any amounts due shall be payable by the Reinsurer to the Company within 30 days following the effective date of commutation.