SUNSET AND COMMUTATION Sample Clauses
The Sunset and Commutation clause establishes a defined period after which the parties’ obligations under an agreement, particularly regarding claims or liabilities, are either terminated (sunset) or settled in a final, binding manner (commutation). In practice, this means that after a specified date, no new claims can be made, and any outstanding matters are resolved through a final settlement process, often involving a lump-sum payment or a closing of accounts. This clause provides certainty and finality for both parties by preventing indefinite liability and ensuring that all obligations are conclusively addressed within a set timeframe.
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SUNSET AND COMMUTATION. A. Ten years after the expiration of this Contract, the Company shall advise the Reinsurer of any Loss Occurrences attaching to this Contract which have not been finally settled and which may result in a claim by the Company under this Contract. No liability shall attach hereunder for any claim or claims not reported to the Reinsurer within this ten year period. If a loss arising out of a Loss Occurrence is reported during this period, all losses arising out of the same Loss Occurrence shall be deemed reported under this paragraph regardless of when notification of loss is provided.
B. If both parties agree to commute the unsettled losses subject to the Contract, then the Reinsurer’s liability for all such unsettled losses shall then be commuted.
C. It is understood that commutation of all such losses shall be made using tabular reserving methods. For each loss, the nominal ultimate value of the Company’s Ultimate Net Loss shall be established by projecting out future medical and indemnity payments and loss expenses by year based on appropriate trends and escalations applied to annual cost estimates. The Contract limit and retention (where applicable) shall then be applied to the nominal ultimate value of the Company’s Ultimate Net Loss to determine the nominal ultimate Contract loss. Mortality factors and discount factors shall then be applied by year to the nominal ultimate Contract loss. The discounted, mortality adjusted projected annual loss payments shall be summed to determine the present value (“commutation price”) of the ultimate Contract loss. The medical escalation, discount and mortality factors are described in paragraph C.
D. The following factors shall be utilized in establishing the commutation price:
SUNSET AND COMMUTATION. The commission allowances which the Reinsurers, in accordance with the preceding stipulations, will pay to the Company, include provisions for all taxes, assessments and expenses falling on the business transacted under this Contract; and in the event of the Reinsurers being compelled to make returns to the Insurance Departments or other departments of any state, District of Columbia, province, county or city, or any board, bureau or association, and consequently being obliged to pay taxes or assessments direct to PAGE such department, board, bureau or association on the premium received from the Company under this Contract, such taxes or assessment shall be refunded by the Company to the Reinsurers. This Section shall have no application to federal or dominion government taxes or to any federal, dominion, state, District of Columbia, province or municipal excess profits or income taxes.