No. 3154-0018
Exhibit 10.1
CERTIFIED TERRORISM LOSS
AGGREGATE QUOTA SHARE
REINSURANCE AGREEMENT
between
PENN AMERICA INSURANCE COMPANY
PENN-STAR INSURANCE COMPANY
and
American Re-Insurance COMPANY
TABLE OF CONTENTS
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ARTICLE PAGE
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I AFFILIATED COMPANIES 1
II BUSINESS REINSURED 1
III TERRITORY 2
IV COMPLIANCE WARRANTY 2
V EXCLUSIONS 3
VI REINSURANCE LIMITS 15
VII AGGREGATE ULTIMATE NET LOSS 15
VIII EXTRA CONTRACTUAL
OBLIGATIONS 16
IX EXCESS JUDGMENTS 17
X DEFINITIONS 18
XI FEDERAL TERRORISM EXCESS
RECOVERY 19
XII PREMIUM 19
XIII REPORTS AND REMITTANCES 20
XIV ERRORS AND OMISSIONS 21
XV ACCESS TO RECORDS 21
XVI RESERVES AND TAXES 21
XVII OFFSET 21
XVIII INSOLVENCY 22
XIX COMMENCEMENT AND
TERMINATION 22
No. 3154-0018
FEDERAL TERRORISM ACT
AGGREGATE QUOTA SHARE
REINSURANCE AGREEMENT
---------------------
(herein referred to as "Agreement")
This Agreement made and entered into by and between PENN AMERICA INSURANCE
COMPANY and PENN-STAR INSURANCE COMPANY, both of Hatboro, Pennsylvania
(hereinafter collectively referred to as "Company") and AMERICAN RE-INSURANCE
COMPANY, a Delaware corporation with administrative offices in Princeton, New
Jersey (hereinafter referred to as "Reinsurer").
WITNESSETH:
The Reinsurer hereby reinsures the Company to the extent and on the terms and
conditions and subject to the exceptions, exclusions and limitations hereinafter
set forth and nothing hereinafter shall in any manner create any obligations or
establish any rights against the Reinsurer in favor of any third party or entity
not a party to this Agreement.
ARTICLE I
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AFFILIATED COMPANIES
--------------------
A. This Agreement is solely between the Company and the Reinsurer. When more
than one insurance company is named as a party to this Agreement, the first
reinsured company named shall be the agent of the other reinsured companies
as to all matters pertaining to this Agreement. Any payments by the
Reinsurer to any of the parties comprising the Company shall constitute
payment from the Reinsurer to the Company under this Agreement.
B. The retention of the Company and the liability of the Reinsurer and all
other benefits accruing to the Company as provided in this Agreement or any
amendments hereto, shall apply to the reinsured companies comprising the
Company as a group and not separately to each of the reinsured companies
named in this Agreement.
ARTICLE II
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BUSINESS REINSURED
------------------
The Company shall cede and the Reinsurer shall accept an 80% Quota Share
participation in the Company's Aggregate Ultimate Net Loss arising from Insured
Losses under the Terrorism Risk Insurance Act of 2002 (the Act) occurring during
the term of this Agreement, up to but not exceeding the Reinsurer's maximum
limit of liability as provided herein. The reinsurance provided hereunder shall
apply only to Insured Losses arising under all written policies, contracts, and
binders of insurance (hereinafter collectively referred to as "Policies" and
individually referred to as "Policy") under all lines of business
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to which the Act is applicable, which are underwritten by the Company that are
new or renewed during the term of this Agreement.
ARTICLE III
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TERRITORY
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This Agreement shall be limited to Insured Loss within the territorial
boundaries covered under the Policies reinsured hereunder as further delineated
or limited by the Act.
ARTICLE IV
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COMPLIANCE WARRANTY
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A. The Company warrants that it will seek to obtain coverage under the
Terrorism Risk Insurance Act and will comply with all provisions of the
Terrorism Risk Insurance Act necessary to obtain coverage thereunder, with
respect to all property and casualty insurance as defined in the Act,
written by the Company, including but not limited to the prescribed notice
and offer of coverage and the disclosures of premium to the policyholder as
required under the Act.
B. The Company further warrants that:
1. for any policy where the insurer receives a written statement from the
insured that affirmatively authorizes an exclusion; or
2. where the insured fails to pay the premium charged for providing
terrorism coverage, an exclusion for such terrorism coverage will be
attached to the Company's policy as permitted under law.
C. The Company shall charge no less than 5% of all other Total Gross Premium
for Certified Terrorism coverage on each policy covered hereunder unless:
1. The original insured declines such terrorism coverage in accordance
with the Act and such declination is not prohibited by law.
2. Otherwise prohibited from doing so by law.
D. The Company warrants that all reinsurance in place at the inception of each
Agreement Year hereunder shall remain unchanged during such Agreement Year
or so deemed.
E. The Company and the Reinsurer have mutually agreed to the Company's
underwriting guidelines for Terrorism as respects certified acts of
terrorism. The Company warrants that these guidelines shall be applied to
all business reinsured hereunder and shall remain unchanged unless agreed
to in writing by American Re-Insurance prior to the implementation of any
such changes. The terms and conditions of this Agreement shall take
precedence over any other agreement between the Company and the Reinsurer
regarding such guidelines.
Revised: June 26, 2003
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ARTICLE V
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EXCLUSIONS
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A. This Agreement does not apply to and specifically excludes:
1. Any loss, cost or expense arising under a subscription placement
coverage.
"Subscription placement" as used herein shall mean insurance coverage
provided by the Company where two or more insurers provide coverage
under layered policies for any one insured where the total amount of
insurance for such insured from all sources is $25,000,000 or more.
2. Property risks having a total insurable value greater than
$50,000,000.
3. The Company's liability and any related expenses, beyond circumscribed
policy provisions, including but not limited to, punitive, exemplary,
consequential or compensatory damages resulting from a claim of an
insured or an insured's assignee against the company its agents or
employees, except as provided by the Extra Contractual Obligations and
Excess Judgments Articles.
4. Business derived from any Pool, Association (including Joint
Underwriting Associations), Syndicate, Exchange, Plan, Fund or other
facility directly as a member, subscriber or participant, or
indirectly by way of reinsurance or assessments. This exclusion shall
not apply to automobile assigned risks or workers' compensation
assigned risks which may be currently or subsequently covered
hereunder, except such assigned risks arising from property or
umbrella coverages.
5. Liability of the Company arising from its participation or membership,
whether voluntary or involuntary, in any insolvency fund, including
any guarantee fund, association, pool, plan or other facility which
provides for the assessment of, payment by, or assumption by the
Company of a part or the whole of any claim, debt, charge, fee or
other obligations of an insurer, or its successors or assigns, which
has been declared insolvent by any authority having jurisdiction.
6. Except as respects Workers' Compensation business hereunder, liability
excluded by the provisions of the following Nuclear clauses attached
hereto. The word "Reassured" used therein means "Company."
USA:
- Liability - Reinsurance No. 1B
- Physical Damage - Reinsurance No. 2
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- Physical Damage and Liability
(Boiler and Machinery) - Reinsurance No. 3.
Canada:
- Liability - Reinsurance Canada Pre 1985
- Physical Damage
- Reinsurance Canada Pre 1985
- Liability - Reinsurance
Canada Post 1985
- Physical Damage - Reinsurance Canada Post 1985
- Physical Damage and Liability Canada -Reinsurance (Boiler
and Machinery)
As respects Workers Compensation business hereunder, operations
employing the process of nuclear fission or fusion or handling of
radioactive material, which operations include but are not limited to:
1. the use of nuclear reactors such as atomic piles, particle
accelerators or generators, or
2. the use, handling or transportation of radioactive materials, or
3. the use, handling or transportation of any weapon of war or
explosive device employing nuclear fission or fusion
The preceding exclusions a., b., and c. do not apply to:
a. the exclusive use of particle accelerators incidental to ordinary
industrial or educational research pursuits, or
b. the exclusive use, handling or transportation of radio isotopes
for medical or industrial use;
c. radium or radium compounds.
7. Coverage provided by the Company to insurance, or reinsurance
companies, captives, brokers or risk retention groups (each
hereinafter referred to as "insured" for purposes of this exclusion)
which provide insurance against liability of the insured for any
damages resulting from alleged or actual tortious conduct by the
insured in the handling of claims brought against any policyholders of
the insured or in the handling of any other business matters with or
on behalf of any policyholders.
8. The following coverages:
a. Financial Guarantees;
b. Credit and Fidelity Coverage;
c. Surety Bonds;
d. Warranty Coverage;
e. Political Risk Coverage;
f. Currency Exchange Coverage;
g. Forgery Coverage; or
h. Kidnap, Extortion or Xxxxxx Coverage.
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9. Aggregate Excess of Loss or Stop Loss Coverages.
10. Retroactive Coverage, except in connection with unknown incidents,
covered under a claims made coverage.
11. Coverage provided on a co-indemnity basis with another insurer,
reinsurer or other entity including an insured under the Company's
policy; however, this exclusion does not apply to the standard
co-insurance provisions of a policy and facultative reinsurance
inuring to the benefit of this Agreement.
12. Coverage underwritten or accepted by any third party except the
binding authority granted by the Company to its duly authorized
agents.
13. Coverage written specifically to insure or reinsure punitive damages.
14. Entertainment business, including but not limited to, Commercial
Negative Film Coverage, Cast Coverage and Completion Bond Coverage.
15. The Company's liability and any related expenses, beyond circumscribed
policy provisions, including but not limited to, punitive, exemplary,
consequential or compensatory damages, resulting from a claim of an
insured or an insured's assignee against the Company its agents or
employees, except as provided for in the Extra Contractual Obligations
and Excess Judgments Articles.
16. All reinsurance assumed by the Company, except intra-Company pooling
arrangements.
17. All loss, cost or expense arising out of, resulting as a consequence
of or related to War. "War", as utilized herein, shall mean war
whether or not declared, civil war, martial law, insurrection,
revolution, invasion, bombardment or any use of military force,
usurped power or confiscation, nationalization or damage of property
by any government, military or other authority.
To the extent there is no Insurance Service Office, Inc. current
standard coverage form for a type of coverage reinsured under this
agreement, "War" as utilized herein shall mean war whether or not
declared, civil war, martial law, insurrection, revolution, invasion,
bombardment or any use of military force, usurped power or
confiscation, nationalization or damage of property by any government,
military or other authority.
18. All loss, cost or expense directly or indirectly arising out of,
resulting as a consequence of or related to Pollution whether or not
there is another cause of loss which may have contributed concurrently
or in any sequence to a loss.
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"Pollution" means any solid, liquid, gaseous or thermal irritant or
contaminant, including smoke, vapor, soot, fumes, acids, alkalis,
chemicals and waste. Waste includes materials to be recycled,
reconditioned or reclaimed.
This exclusion shall not apply to the extent that such liabilities
would be covered under the current standard unendorsed coverage forms
issued by Insurance Services Office, Inc. for each type of coverage
reinsured under this Agreement.
19. Space or space-related risks such as, but not limited to, satellites,
spacecraft, launch sites and launch vehicles including cargo and
freight carried therein, in all phases of operation.
20. a. Any coverage written specifically to apply to Internet exposures;
or
b. Any loss, cost or expense arising out of or related to the
Internet, except if covered under any coverage not written or
endorsed specifically to apply to Internet exposures.
Notwithstanding the above referenced exception, the reinsurance
provided under this agreement shall not apply to the following
persons, entities or exposures, except for in force policies with
effective dates prior to 9/1/01 and covered under this Agreement:
(1) Internet Service Providers, meaning any person or entity
providing access to the Internet, content over the Internet or
connection to the Internet; or
(2) Application Service Providers, meaning any person or entity that
provides software and associated services to a subscriber base
across an area network; or
(3) Internet Backbone Providers, meaning any person or entity that
routes or provides channels for packets that transport data from
point to point on the Internet; or
(4) Any person or entity that derives ninety percent or more of gross
revenue or conducts or executes ninety percent or more of
business transactions on or through the Internet; or
(5) Any person or entity that provides electronic mail services;
or
(6) Any person or entity that develops, supplies, and/or installs
encryption software for use on the Internet.
"Internet" as utilized in this exclusion shall mean, the
international computer network of interoperable packet switched
data networks, also known as the worldwide web or worldwide
network of computers.
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21. All Workers' Compensation business, except for Employers' Liability
Stop Gap coverage.
22. All automobile Liability business when written as such.
B. The reinsurance provided under this Agreement for Liability business, other
than Workers Compensation, and Automobile Liability business, shall not
apply to the following:
1. Professional Liability or Errors and Omissions Coverage other than for
the following:
a. "Beau-T-Pak";
b. Barbers;
c. Opticians;
d. Veterinarians that treat household pets;
e. Morticians;
f. Clergy;
g. Employee Benefits Liability (E&O Coverage);
h. Druggists;
i. "Day Care Pak";
j. "Adult Day Care;
k. "Health Club Pak";
l. "Instructor Pak";
m. In-Home Day Care;
n. "Pet Pak"; or
o. "Wellness Pak".
2. Directors' and Officers' Liability Coverage, except for Condominiums
and Homeowners Associations.
3. The following coverages:
a. Product recall;
b. Product tampering;
c. Product integrity impairment; or
d. Product guarantee.
4. Coverage provided under or for liability arising from any federal law,
including but not limited to; USL&H, Xxxxx Act, Defense Base Act,
Federal Employers' Liability Act, Outer Continental Shelf Lands Act,
the Federal Coal Mine Health and Safety Act of 1969, the
Non-appropriated Fund Instrumentality's Act, any other federal law
awarding damages for violation of those laws or regulations issued
there under and any amendments to any of the aforementioned laws or
regulations.
5. Securities Act Liability Coverage (S.E.C. Liability).
6. International Massage Program.
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7. Personal Umbrella Liability Coverage.
8. Environmental Impairment Liability Coverage.
9. Products Liability Coverage written without an annual aggregate limit.
10. Employer's liability and/or common law liability of employer's to
their employees when coverage is provided under Worker's Compensation
Coverage.
11. Protection and Indemnity Liability Coverage.
12. Primary coverage written on a deductible basis or excess of a
self-insured retention when such deductible or retained amounts are
greater than $50,000.
13. Uninsured or Underinsured Motorists Coverage.
14. Advertising or Personal Injury Liability Coverage for any person or
entity whose business is advertising, broadcasting, publishing or
telecasting.
15. Aircraft and airports as respects coverage for all liability arising
out of the ownership, maintenance or use of aircraft and/or flight or
ground operations.
16. Blanket or all-risk type coverage, commonly known as Organizational
Liability, Organization Liability, Operational Liability, Integrated
Risk, Enterprise Risk or under similar names, written in, or endorsed
to, a policy covering all types of losses incurred by, or claims
against, an entity; provided, however, that this exclusion shall not
include any named-peril grant of coverage which contemplates
specifically enumerated types of claims or losses.
17. Liability, including any related expenses directly or indirectly
arising out of, resulting as a consequence of, or related to
employment-related practices, including, but not limited to liability
related to harassment, wrongful termination or discrimination, whether
under coverage written as such or otherwise.
18. Liability including any related expenses, arising out of the Employee
Retirement Income Security Act of 1974 and amendments thereto.
19. Liability including any related expenses, directly or indirectly
arising out of, resulting as a consequence of or related to Sexual
Misconduct, whether or not there is another cause of loss which may
have contributed concurrently or in any sequence to a loss for the
Company's Day Care Pak, In Home Day Care
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Pak or Adult Day Care policies, except for in force policies with
effective dates prior to 9/1/01, and for Day Care Pak, In Home Day
Care Pak or Adult Day Care policies of the Company where the insured
purchases the Company's buy-back coverage.
"Sexual Misconduct" as utilized herein shall include, sexual
molestation, sexual harassment, sexual abuse, any verbal or nonverbal
communication, behavior, or conduct with sexual connotations or the
infliction of physical, emotional or psychological injury whether for
purpose of sexual gratification, discrimination, intimidation,
coercion or other sexual purpose, regardless of whether such action or
resulting injury is alleged to be intentionally or negligently caused.
20. All loss, cost or expense directly or indirectly, arising out of,
resulting as a consequence of, or related to the manufacture,
distribution, testing, remediation, removal, storage, disposal, sale,
use of or exposure to the following, whether or not there is another
cause of loss which may have contributed concurrently or in any
sequence to a loss:
a. Asbestos or materials or products containing asbestos;
b. 2.4,5 Trichloroacetic acid ("2,4,5-1") or 2.3,7,8 - TCDD;
c. Diethylstilbestrol ("DES") in any dosage or form Any intrauterine
device ("IUD");
d. Any product containing silicone, which is in any form injected or
implanted into the body;
e. Phen-fen;
f. Dioxin;
g. Polychlorinated biphenyls;
h. Lead or materials or products containing lead;
i. Latex gloves;
j. Polybutylene piping (acrylonitrile-butadine-styrene); or
k. Bio-engineered products, including any food products or
therapeutic or diagnostic pharmaceutical products which are
developed using some form of bioengineering.
21. All loss, cost or expense directly arising out of, resulting as a
consequence of, or related to Electromagnetic Radiation related to the
manufacture or generation of:
a. Electric power and/or power lines;
b. Cellular phones;
c. Radio and TV broadcasting and/or towers except for insured's
with total sales less than $500,000;
d. Computers;
e. Electric blankets;
f. Military radar or weapons;
g. Police or weather radar;
h. Satellite stations;
i. Magnetic resonance imaging equipment;
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j. X-ray equipment, except sales that are 10% or less of insured's
total sales; or
k. Microwave ovens;
"Electromagnetic Radiation" as used herein, shall include magnetic
energy waves, fields or forces generated, produced, distributed,
transmitted or maintained by charges, currents, frequencies, forces of
energy or electricity."
22. Products Liability or Completed Operations Liability related to:
a. Drugs, except for liability arising from the retail sale or
wholesale distribution of drugs by insureds not engaged in their
manufacture ;
b. Chemicals, except for liability arising from the retail sale or
wholesale distribution of household chemicals by insureds not
engaged in their manufacture;
c. Insecticides and pesticides, except sales that are 20% or less of
insured's total sales;
d. Aircraft or aircraft parts;
e. Animal feed, other than custom-blended grains without chemical or
pharmacological additives, except sales that are 20% or less of
insured's total sales;
f. Cosmetics manufacturing, except for the manufacture of soaps or
shampoos where the insured's receipts are less than 10% of total
sales or skin and hair care products prepared at beauty salons or
similar establishments,
g. Tobacco and tobacco products, but this exclusion shall not apply
to liability arising from the retail sale or wholesale
distribution of tobacco products by insureds not engaged in their
manufacture;
h. Automobiles, trucks, motorcycles and all-terrain vehicles or
component parts critical to the operation of the foregoing, but
this exclusion shall not apply to the liability arising from the
retail sale or wholesale distribution of component parts critical
or non-critical to the operation of the foregoing not engaged in
their manufacture;
i. Fiberglass, but this exclusion shall not apply to liability
arising from the retail sale or wholesale distribution of
fiberglass products by insureds not engaged in their manufacture;
j. Firearms, except sales that are 20% or less of insured's total
sales;
k. Medical equipment;
l. Elevator or hoist manufacturing, installation, inspection,
service or repair;
m. Security and alarm system manufacturing, installation,
inspection, service or repair, except for coverage as provided
for in the Company's guidelines as of 9/01/01; or
n. Fire suppression system manufacturing, installation, inspection,
service or repair, except for coverage as provided for in the
Company's guidelines as of 9/01/01.
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23. Wrecking or demolition of buildings, structures, watercraft or
aircraft, except for buildings three stories or less.
24. Railroad, subway and street railway construction, operation or
maintenance, excepting sidetrack agreements.
25. Bridge, tunnel, dam or reservoir design, construction, operation or
maintenance.
26. Mining, except insureds with receipts from quarry operations of less
than 5% of total sales.
27. Onshore or offshore gas or oil drilling operations, pipelines, or
xxxxx.
28. Mill or grain elevator operation.
29. Manufacture, assembly, packing, handling, processing, transportation,
sale, storage or detonation of fireworks, fuses, nitroglycerine,
ammonium nitrate, magnesium, celluloid, pyroxylin, ammunition,
explosives or any product in which an explosive substance is an
ingredient, or component part.
The term "explosive substance," as used herein, is any substance
manufactured for the express purpose of exploding as differentiated
from those commodities, other than those commodities specified in this
exclusion, which are only fortuitously explosive, such as gasoline,
fuel oil, or dyestuffs.
30. Manufacture, production, refining, storage, sale, distribution or
transportation of natural or artificial fuel, gas, butane, methane,
propane, other liquefied petroleum gases, gasoline or gases or air
under pressure, except this exclusion does not apply to gasoline at
hardware stores, convenience stores and automobile service stations
storing gasoline on premises for retail sale, fuel oil dealers, and
LPG sales that are 20% or less of the insured's total sales.
31. Stevedoring.
32. Ski lodges, lifts, cable cars and tows.
33. Shipbuilding, ship repair, ship breaking, dry dock, and quays or wharf
operations.
34. Watercraft over 50 feet in length.
35. Amusement parks, amusement devices (other than coin operated devices),
fairs, exhibitions, carnivals, circuses and zoos (other than petting
zoos),
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except when written within the guidelines of the of the Company's
Special Events Program.
36. Sports or other entertainment events with an expected capacity, at any
one time, of 25,000 or more people.
37. Arenas, grandstands, stadiums, theatres, halls and any other indoor
venue with an expected capacity, at any one time, of 25,000 or more.
38. Electric and gas utilities and the municipalities, authorities and all
boards, commissions, or entities responsible for administering or
controlling these utilities.
39. Governmental agencies, entities, or political subdivisions of a state
or municipalities with a population of 50,000 or more, except for
insureds required to name the local municipality as a named insured
for special events.
40. Insurance companies, agents, brokers, or risk retention groups,
inspection services, claims services and rating bureaus, unless
coverage for errors and omissions is excluded under the policy
reinsured.
41. School boards or school districts.
42. Nursing homes and nursing home care, except for adult day care centers
or the Family Home Care Program when written within the Company
guidelines as of 9/01/01.
43. Banks and other financial institutions unless the Company's coverage
contains a financial institution endorsement agreed to by the
Reinsurer.
44. Contractors engaged in the construction, erection or exterior
maintenance of structures in excess of three stories, except for
window washers or power washing operations.
45. Crop-dusting.
46. Insureds in the business of Scaffold manufacture, installation,
repair, removal or rental.
47. Inverse condemnation liability.
48. All loss, cost or expense arising out of, resulting as a consequence
of or related to poultry products, operations or exposures, including
but not limited to; poultry houses, poultry processing operations,
live birds, processed birds, egg laying operations, egg processing
operations or eggs.
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49. Contractors, except as provided for by the Company's Penn Amerigram
dated November 7, 2001, and attached to this Agreement as APPENDIX B.
C. In the event the Company is inadvertently bound on any exclusion enumerated
under paragraph B, the reinsurance provided under this Agreement shall
apply until discovery by the Company of the existence of the inadvertent
binding and for 30 days thereafter, and shall then cease unless, within the
30-day period, the Company has received from the Reinsurer written notice
of its approval of such binding.
D. The reinsurance provided under this Agreement for Property business shall
not apply to the following:
1. Difference in Conditions Coverage.
2. Ocean Marine Coverage.
3. Mortgage impairment insurance and similar kinds of insurance, however
styled.
4. Mining including mining equipment.
5. Aviation business.
6. The following coverages:
a. Product recall;
b. Product tampering;
c. Product integrity impairment; or
d. Product guarantee.
7. Excess Coverage, meaning coverage written to apply specifically in
excess over underlying insurance.
8. Boiler and Machinery Coverage.
9. Livestock Mortality or Fertility Coverage.
10. Furriers' and Jewelers Block Coverage.
11. Contingency business interruption risks of any kind.
12. Transmission and distribution lines other than those within 500 feet
of an insured's premises. It is understood and agreed that public
utilities extension and/or suppliers extension and/or contingent
business interruption coverage are not subject to this exclusion
provided that these are not part of a transmitter's or distributor's
policies.
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13. All onshore or offshore:
a. gas and oil drilling risks;
b. petrochemical risks;
c. pipeline risks; or
d. well risks.
14. Flood, surface water, waves, tidal water or tidal waves, overflow of
streams or other bodies of water or spray from any of the foregoing,
all whether driven by wind or not; provided, however, this exclusion
shall not apply to losses covered under automobile physical damage
policies or Inland Marine Policies.
15. Earthquake, landslide and other earth movement provided, however, this
exclusion shall not apply to automobile physical damage coverage or
Inland Marine Policies.
16. Railroad property, rolling stock, tracks or roadbeds.
17. Fine arts collections exceeding $5,000,000 in total value.
18. Mobile homes, except mobile home parks written on a commercial
lines basis with less than 25% of the mobile homes being owned
by the insured.
19. Risks having total insurable value of more than $50,000,000.
20. Growing, standing or drying crops and timber.
21. Watercraft except watercraft insured under personal property floaters.
22. Bridges, dams and tunnels.
23. All loss, cost or expense arising out of, resulting as a consequence
of or related to poultry products, operations or exposures, including
but not limited to; poultry houses, poultry processing operations,
live birds, processed birds, egg laying operations, egg processing
operations or eggs.
24. As respects Property risks:
a. Any one risk at any one location where the risk Total
Insured Value (hereinafter TIV), inclusive of all coverages
is greater than $50,000,000; or
b. The aggregate TIV for all risks insured by the company at
any one location, inclusive of all coverages is greater than
$50,000,000; or
c. Any of the following risks (i.e., owners of, not tenants
in):
1. Airlines or Airports
2. Apartments, Condos, or Co-Operatives (i.e., Urban Only
and greater than 25 stories)
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3. Bridges (i.e., greater than 300 feet in length)
4. Casinos of Las Vegas and Atlantic City only
5. Chemical Manufacturing or Distributing Companies except
for liability arising from the retail sale or wholesale
distribution of household chemicals by insureds not
engaged in their manufacture
6. Convention or Exhibition Centers (i.e., Urban only)
with an expected capacity, at any one time, of 25,000
or more
7. Dams (i.e., greater than 300 feet in length)
8. Defense or Aerospace Industries
9. Department Stores that are part of malls over 1,000,000
sq. feet
10. Financial Institutions (i.e., Building. and Time
Element coverages or multiple locations (i.e., Office
Schedules of greater than 10,000 sq. feet per
location))
11. Government buildings (i.e., Federal or State) and
National Landmarks
12. High Tech Manufacturing Companies and Telecommunication
Companies with Total Insured Values greater than
$5,000,000.
13. Hospitals (i.e., Urban only)
14. Hotels (i.e., Urban only and greater than 25 stories)
15. Internet Companies and Major Media Companies with Total
Insured Values greater than $5,000,000.
16. Office Buildings (i.e., Urban only and greater than 25
stories)
17. Oil and Gas Manufacturing or Distributing Companies
18. Public School Districts (i.e., Urban only)
19. Port or Transit Authorities
20. Railroads
21. Shopping Malls over 1,000,000 sq. feet
22. Stadiums (i.e., all pro sports)
23. Tunnels (i.e., greater than 300 feet in length)
24. Universities (i.e., Urban only)
25. Utilities electric, gas, water & sewer
ARTICLE VI
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REINSURANCE LIMITS
------------------
The Reinsurer's maximum liability hereunder shall not exceed $4,000,000, being
80% of $5,000,000, during the Agreement Year.
ARTICLE VII
-----------
AGGREGATE ULTIMATE NET LOSS
---------------------------
A. The term "Aggregate Ultimate Net Loss" shall mean the sum or sums paid
by the Company for losses as covered herein for which it is liable
under policies reinsured hereunder including any extra contractual
obligations as provided within the
-15-
Extra Contractual Obligations Article, any excess judgments as
provided within the Excess Judgments Article and any Loss Adjustment
Expenses as defined within Paragraph B below, to the extent qualified
and reimbursable under the Act, which are within the Insurer
Deductible or Company Retained Amount as determined under the Act. All
sums hereunder shall first be subject to deductions for all other
reinsurances whether collectible or not that are applicable to losses
hereunder, and any subrogation or salvage received. The Reinsurer's
liability shall not increase by reason of the inability of the Company
to collect from any other reinsurer, for any reason, any amount that
may be due from such reinsurer.
B. The term "Loss Adjustment Expenses" shall mean all expenses which have
been paid by the Company in the investigation, adjustment, settlement
or defense of specific losses covered herein for which it is liable
under policies of the Company reinsured hereunder, (also including
salaries and expenses of salaried adjusters associated therewith), but
not including office, administrative or overhead expenses of the
Company or salaries and expenses of its officials and employees.
C. In the event of the insolvency of the Company, "Aggregate Ultimate Net
Loss" shall be as otherwise defined herein except it shall include the
sum or sums which the Company has incurred for losses as covered
herein for which it is liable instead of the sum or sums paid by the
Company for losses as covered herein for which it is liable, and
payment by the reinsurer shall be made to the liquidator, receiver or
statutory successor of the Company in accordance with the INSOLVENCY
Article.
D. In the event a verdict or judgment is reduced by an appeal or a
settlement, subsequent to the entry of a judgment, resulting in an
ultimate saving on such verdict or judgment, or a judgment is reversed
outright, the expense incurred in securing such final reduction or
reversal shall (1) be prorated between the Reinsurer and the Company
in proportion that each benefits from such reduction or reversal and
the expense incurred up to the time of the original verdict or
judgment shall be prorated in proportion to each party's interest in
such verdict or judgment; or (2) when the terms and conditions of the
Company's policies reinsured hereunder include expenses as part of the
policy limit, be added to the Company's Aggregate Ultimate Net Loss.
E. Except as otherwise provided herein, the Company shall pay or credit
the Reinsurer with its proportionate share of any subrogation, salvage
or other amounts recovered by the Company applying to the losses
hereunder.
ARTICLE VIII
------------
EXTRA CONTRACTUAL OBLIGATIONS
-----------------------------
A. As reinsured under this Agreement, the Company shall be protected for
any Extra Contractual Obligation. (Such Extra Contractual Obligation
shall be added to the amount of the award or settlement within the
Company's policy limit and the sum thereof shall be considered one
loss subject to the exclusions and limitations set forth in this
Agreement.)
-16-
B. "Extra Contractual Obligation" shall be defined as those liabilities
not covered under any other provision of this Agreement, and any legal
costs and expenses incurred in connection therewith, which arise from
the Company's handling of any claim on business covered hereunder,
including but not limited to, the 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, in the
preparation of the defense, in the trial of any action against its
insured or in the preparation or prosecution of an appeal consequent
upon such action.
C. For the purpose of the application of this Agreement, an Extra
Contractual Obligation shall be deemed to have arisen on the same date
as the original loss that gave rise to the Extra Contractual
Obligation.
D. This Article shall not apply where the Extra Contractual Obligation
has been incurred due to the fraud or criminal act of a member of the
Board of Directors, an officer, an agent, or an employee of the
Company or any other person or organization involved in the
presentation, defense or settlement of any claim covered hereunder,
whether acting individually or collectively or in collusion with any
person or organization.
E. Recoveries from any form of insurance or reinsurance, whether
separately purchased from another insurance carrier or self insurance
issued by the Company to itself, which protects the Company against
claims which are the subject matter of this Article, will inure to the
benefit of the Reinsurer and shall be first deducted to arrive at the
amount of any Extra Contractual Obligation covered hereunder, whether
collectible or not.
F. The coverage provided under this Article shall not apply where the
laws, regulations or public policy of an applicable jurisdiction would
prohibit such coverage. If any provision of this Article shall be
rendered illegal or unenforceable by the laws, regulations or public
policy of any jurisdiction, such provision shall be considered void in
such jurisdiction, but this shall not affect the validity or
enforceability of any other provision of this Agreement or the
enforceability of such provision in any other jurisdiction.
ARTICLE IX
----------
EXCESS JUDGMENTS
----------------
A. As reinsured under this Agreement, the Company shall be protected for
any Excess Judgment awarded by a court of competent jurisdiction
against the Company. (Such Excess Judgment shall be added to the
amount of the award or settlement within the Company's policy limit
and the sum thereof shall be considered one loss subject to the
exclusions and limitations set forth in this Agreement.)
-17-
B. "Excess Judgment" shall mean any amount in excess of the Company's
policy limits, but otherwise within the coverage terms of the policy,
that is paid by the Company, together with any legal costs and
expenses incurred in connection therewith, resulting from the failure
by the Company to settle within the policy limit, or by reason of
alleged or actual negligence, fraud, or bad faith, in discharging its
duty to defend, in preparing the defense in an action against its
insured or in discharging its duty to prepare or prosecute an appeal
consequent upon such action.
C. This Article shall not apply where the Excess Judgment has been
incurred due to the fraud or criminal act of a member of the Board of
Directors, an officer, an agent or an employee of the Company, or any
other person or organization involved in the presentation, defense or
settlement of any claim covered hereunder, whether acting individually
or collectively or in collusion with any person or organization.
D. Recoveries from any form of insurance or reinsurance, whether
separately purchased from another insurance carrier or self insurance
issued by the Company to itself, which protects the Company against
claims which are the subject matter of this Article, will inure to the
benefit of the Reinsurer and shall be first deducted to arrive at the
amount of any Excess Judgment hereunder, whether collectible or not.
E. The coverage provided under this Article shall not apply where the
laws, regulations or public policy of an applicable jurisdiction would
prohibit such coverage. If any provision of this Article shall be
rendered illegal or unenforceable by the laws, regulations or public
policy of any jurisdiction, such provision shall be considered void in
such jurisdiction, but this shall not affect the validity or
enforceability of any other provision of this Agreement or the
enforceability of such provision in any other jurisdiction.
ARTICLE X
---------
DEFINITIONS
A. "Terrorism Risk Insurance Act" or "Act" as utilized herein shall mean
the provisions of the Terrorism Risk Insurance Act of 2002 in place at
the inception date of this Agreement, including any rules or
regulations applicable thereto. Subsequent amendments to the Act shall
not be included within the definition hereunder except as mutually
agreed in writing by the parties hereto.
B. "Insured Loss(es)," "Program Year," "Act of Terrorism," "Insurer
Deductible" and "Insurer" as utilized herein shall follow the
definitions as provided in the Act.
C. "Company Retained Amount" shall mean amounts covered hereunder which
the Company retains net of any amounts paid or payable by the Federal
Government
-18-
for Insured Loss in excess of the Insurer Deductible, all as provided
under the Terrorism Risk Insurance Act of 2002.
D. "Agreement Year" as utilized herein, shall mean that period of time
from the date of inception to the date of termination of this
Agreement as more fully delineated in the Commencement and Termination
Article.
ARTICLE XI
----------
FEDERAL TERRORISM EXCESS RECOVERY
---------------------------------
As respects the Insured Losses of the Insurer for each Program Year, it is
hereby agreed that to the extent the Insurer's total reinsurance recoverables
for Insured Losses, whether collected or not, combined with the financial
assistance available to the Insurer under the Act exceeds the aggregate amount
of Insured Losses paid by the Insurer, less any other recoveries or
reimbursements, such excess amounts (the "Excess Recovery") shall be allocated
to the Company. The allocation to the Company shall be deemed to be an amount
equal to the proportion that the Company's Insured Losses bear to the Insurer's
total Insured Losses for each Program Year. The Company shall then reimburse the
Reinsurer for its share of the Excess Recovery allocated to the Company. The
Reinsurer's share of the Excess Recovery shall be deemed to be an amount equal
to the proportion that the Reinsurer's payment of Insured Losses under this
Agreement bears to the Company's total collected reinsurance recoverables for
Insured Losses. The Company also agrees to provide the Reinsurer with all
necessary data respecting the transactions covered under this Clause.
ARTICLE XII
-----------
PREMIUM
-------
A. The premium for the reinsurance provided under this Agreement shall be
computed at the rate of 55% of the Company's Gross Net Earned Premium for
terrorism on the business reinsured hereunder.
B. The minimum premium for the reinsurance provided under this Agreement is
$400,000.
C. "Gross Net Earned Premium" as used herein means the Company's net premiums
written for terrorism (i.e., gross premiums for terrorism less return
premiums for terrorism) during the period for which computation is being
made, plus the net unearned premiums for terrorism at the beginning of the
period, less the net unearned premiums for terrorism at the end of the
period; said net unearned premium for terrorism to be computed on the
monthly pro rata basis.
D. The minimum premium stipulated herein shall be fully earned as of the
inception date of this Agreement and shall be paid in advance by the
Company to the Reinsurer in equal installments on 1/1, and 7/1, during the
term of this Agreement.
-19-
ARTICLE XIII
------------
REPORTS AND REMITTANCES
-----------------------
A. The Company will provide the Reinsurer with all necessary data respecting
premiums and losses, including reserves thereon, at dates and on forms as
indicated below.
B. The Company shall render an account within 45 days after the end of each
quarter summarizing the following information, by Agreement Year, relating
to reinsurance covered under this Agreement during the 2003 Program Year:
1. A Statement of premiums including: policy number and effective
date; insured name; line of business; total written premium;
total unearned premium; written terrorism premium; unearned
terrorism premium; ceded terrorism premium.
2. A Statement of Insured Losses including: company claim number;
insured name; claimant name; date of loss or accident; policy
number and effective date; line of business; ceded paid loss and
Loss Adjustment Expense; ceded subrogation, salvage,
reimbursements or other available recoveries; ceded loss and Loss
Adjustment Expense reserves; and Property Claim Services
catastrophe number (if applicable).
3. An Account Current summarizing minimum premium paid to date,
Insured Losses and Loss Adjustment Expenses paid, any
subrogation, salvage, reimbursements or recoveries, and any net
balance due either party hereunder.
The Reinsurer shall remit any balance due the Company as indicated by
the aforementioned Account Current, promptly upon the Reinsurer's
receipt of the Account Current.
C. Within 45 days after the expiration of this Agreement and at the end of
each Agreement Year thereafter, until all premiums are accounted for, the
Company shall render to the Reinsurer a statement of the Company's Gross
Net Earned Premium for terrorism on business hereunder during the term of
this Agreement and a calculation of the premium due hereunder computed by
the application of the rate set forth in the Premium Article to the
Company's Gross Net Earned Premium for terrorism. If the actual premium
owed to the Reinsurer under this Agreement is more than the minimum premium
stipulated in the Premium Article, the additional premium shall be
forwarded to the Reinsurer with the statement.
D. The Company shall notify the Reinsurer immediately, in writing, of any loss
which may result in a claim under this Agreement equal to or greater than
$100,000 to the Reinsurer. In addition, the Company shall immediately
provide all claim related
-20-
information specifically requested by the Reinsurer on any claim reported
to the Reinsurer in the monthly report herein.
E. The Company has the obligation to investigate and defend claims or suits
affecting this reinsurance and to pursue such claims or suits to final
determination. The Company, when so requested, 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, suit or proceeding
involving this reinsurance, and the Company and the Reinsurer shall
cooperate in every respect in the defense of such claim, suit or
proceeding.
ARTICLE XIV
-----------
ERRORS AND OMISSIONS
--------------------
Inadvertent errors or omissions shall not relieve either party from liability
which would have attached under the terms of the Company's policy and this
Agreement had such error or omission not occurred, provided that, immediately
upon discovery the responsible party notifies the other party hereunder in
writing and takes prompt corrective action.
ARTICLE XV
----------
ACCESS TO RECORDS
-----------------
The Company shall place at the disposal of the Reinsurer and the Reinsurer shall
have the right to inspect, through its authorized representatives, at all
reasonable times during the currency of this Agreement and thereafter, the
books, records and papers of the Company pertaining to the reinsurance provided
hereunder and all claims made in connection therewith.
ARTICLE XVI
-----------
RESERVES AND TAXES
------------------
A. The Reinsurer shall maintain legal reserves with respect to claims
hereunder.
B. The Company will be liable for all taxes on premiums reported to the
Reinsurer hereunder and will reimburse the Reinsurer for such taxes where
the Reinsurer is required to pay the same.
ARTICLE XVII
------------
OFFSET
------
Each party hereto shall have, and may exercise at any time and from time to
time, the right to offset any balance or balances, whether on account of
premiums or on account of losses or otherwise, due from such party to the other
(or, if more than one, any other) party hereto
-21-
under this Agreement or under any other reinsurance agreement heretofore or
hereafter entered into by and between them, and may offset the same against any
balance or balances due or to become due to the former from the latter under the
same or any other reinsurance agreement between them; and the party asserting
the right of offset shall have and may exercise such right whether the balance
or balances due or to become due to such party from the other are on account of
premiums or on account of losses or otherwise and regardless of the capacity,
whether as assuming insurer or as ceding insurer, in which each party acted
under the agreement or, if more than one, the different agreements involved,
provided, in the event of the insolvency of a party hereto, offsets shall only
be allowed in accordance with the laws of the insolvent party's state of
domicile.
ARTICLE XVIII
-------------
INSOLVENCY
----------
(If more than one reinsured company is included in the designation of "Company"
the provisions set forth in this Article shall apply only to the insolvent
company or companies)
In the event of the insolvency of the Company and the appointment of a
conservator, liquidator or statutory successor, the reinsurance provided by this
Agreement shall be payable by the Reinsurer directly to the Company or to its
liquidator, receiver or statutory successor on the basis of the liability of the
Company under the contract or contracts reinsured. Subject to the right of
offset and the verification of coverage, the Reinsurer shall pay its share of
the loss without diminution because of the insolvency of the Company. The
liquidator, receiver or statutory successor of the Company shall give written
notice of the pendency of each claim against the Company on a policy or bond
reinsured within a reasonable time after such claim is filed in the insolvency
proceeding. During the pendency of such claim, the Reinsurer may, at its own
expense, investigate such claim and interpose in the proceeding where such claim
is to be adjudicated any defense or defenses which it may deem available to the
Company, its liquidator or receiver or statutory successor. Subject to court
approval, any expense thus incurred by the Reinsurer shall be chargeable against
the Company as part of the expense of liquidation to the extent of such
proportionate share of the benefit as shall accrue to the Company solely as a
result of the defense undertaken by the Reinsurer. The reinsurance shall be
payable as set forth above except where this Agreement specifically provides for
the payment of reinsurance proceeds to another party in the event of the
insolvency of the Company.
ARTICLE XIX
-----------
COMMENCEMENT AND TERMINATION
----------------------------
A. This Agreement shall be effective for the Program Year beginning 12:01 A.M.
January 1, 2003 and terminating 12:00 Midnight December 31, 2003, at the
location as determined under the Act.
B. The Reinsurer shall be discharged and released of all liability as of the
date of termination of this Agreement for any Insured Loss under the
Company's policies
-22-
occurring on or after the date and time of termination of this Agreement
unless otherwise directed under applicable provisions of the Act.
C. Notwithstanding the termination of this Agreement as hereinabove provided,
the provisions of this Agreement shall continue to apply to all unfinished
business hereunder to the end that all the obligations and liabilities
incurred by each party hereunder prior to such termination shall be fully
performed and discharged.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
in duplicate this day of , 2003;
ACCEPTED:
PENN AMERICA INSURANCE COMPANY
PENN-STAR INSURANCE COMPANY
----------------------------
and in Princeton, New Jersey, this day of 2003.
AMERICAN RE-INSURANCE COMPANY
----------------------------
Vice President
DATED: June 3, 2003
RG/rg
-23-
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - No. 1B
(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
reinsurer 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 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 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.
(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
-1-
(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 to expenses incurred with respect
first aid,
to { bodily injury, sickness,
disease or death
bodily injury resulting from the hazardous properties of
nuclear material and arising out of the operation of 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 thereat.
IV. As used in this endorsement:
"hazardous properties" include radioactive, toxic or explosive
properties; "nuclear materials" means source material, special nuclear
material or byproduct material; "source material," "special nuclear
material," "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 primarily for its source
material content and (2) resulting from the operation by any person or
organization of any nuclear facility included within the definition of
nuclear facility under paragraph (a) or (b) thereof; "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,
-2-
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 xxxxxxxx xxxx 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.
--------------------------------------------------------------------------------
* NOTE: The words printed in italics 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.
-3-
NUCLEAR INCIDENT EXCLUSION CLAUSE--
PHYSICAL DAMAGE--REINSURANCE--NO. 2
(1) This Reinsurance does not cover any loss or liability accruing to
the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
from any Pool of Insurers or Reinsurers formed for the purpose of covering
Atomic or Nuclear Energy risks.
(2) Without in any way restricting the operation of paragraph (1) of
this Clause, this Reinsurance does not cover any loss or liability accruing
to the Reassured, directly or indirectly and whether as Insurer or
Reinsurer, from any insurance against Physical Damage (including business
interruption or consequential loss arising out of such Physical Damage) to:
I. Nuclear reactor power plants including all auxiliary property on the
site, or
II. Any other nuclear reactor installation, including laboratories handling
radioactive materials in connection with reactor installations, and
"critical facilities" as such, or
III.Installations for fabricating complete fuel elements or for processing
substantial quantities of "special nuclear material," and for
reprocessing, salvaging, chemically separating, storing or disposing of
"spent" nuclear fuel or waste materials, or
IV. Installations other than those listed in paragraph (2) III above using
substantial quantities of radioactive isotopes or other products of
nuclear fission.
(3) Without in any way restricting the operations of paragraphs (1)
and (2) hereof, this Reinsurance does not cover any loss or liability by
radioactive contamination accruing to the Reassured, directly or
indirectly, and whether as Insurer or Reinsurer, from any insurance on
property which is on the same site as a nuclear reactor power plant or
other nuclear installation and which normally would be insured therewith
except that this paragraph (3) shall not operate:
(a) where Reassured does not have knowledge of such nuclear reactor
power plant or nuclear installation, or
(b) where said insurance contains a provision excluding coverage for
damage to property caused by or resulting from radioactive
contamination, however caused. However on and after 1st January 1960
this sub-paragraph (b) shall only apply provided the said radioactive
contamination exclusion provision has been approved by the Governmental
Authority having jurisdiction thereof.
(4) Without in any way restricting the operations of paragraphs (1),
(2) and (3) hereof, this Reinsurance does not cover any loss or liability
by radioactive contamination accruing to the Reassured, directly or
indirectly, and whether as Insurer or Reinsurer, when such radioactive
contamination is a named hazard specifically insured against.
(5) It is understood and agreed that this Clause shall not extend to
risks using radioactive isotopes in any form where the nuclear exposure is
not considered by the Reassured to be the primary hazard.
(6) The term "special nuclear material" shall have the meaning given
it in the Atomic Energy Act of 1954 or by any law amendatory thereof.
(7) Reassured to be sole judge of what constitutes:
(a) substantial quantities, and
(b) the extent of installation, plant or site.
Note.--Without in any way restricting the operation of paragraph (1)
hereof, it is understood and agreed that:
(a) all policies issued by the Reassured on or before 31st December
1957 shall be free from the application of the other provisions of
this Clause until expiry date or 31st December 1960 whichever first
occurs whereupon all the provisions of this Clause shall apply,
-1-
(b) With respect to any risk located in Canada policies issued by the
Reassured 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 1960 whichever first occurs whereupon all the provisions
of this Clause shall apply.
-2-
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE AND LIABILITY
(BOILER AND MACHINERY POLICIES) - REINSURANCE - No. 3
(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 contracts of the
Reassured (new, renewal and replacement) 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
(a) all policies issued by the Reassured to become effective
on or before 30th April, 1958, shall be free from the
application of the other provisions of this Clause until
expiry date or 30th April, 1961, whichever first occurs,
whereupon all the provisions of this Clause shall apply,
(b) with respect to any risk located in Canada policies issued
by the Reassured to become 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, 1960, whichever first occurs, whereupon all the
provisions of this Clause shall apply.
-1-
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -
REINSURANCE -
CANADA
Applicable to policies in effect prior to January 1, 1985.
1. This Contract does not cover any loss or liability accruing to the
Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any
Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or
Nuclear Energy risks.
2. Without in any way restricting the operation of paragraph 1 of this
clause, this Contract does not cover any loss or liability accruing to the
Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any
insurance against Physical Damage (including business interruption or
consequential loss arising out of such Physical Damage) to:
(1) Nuclear reactor power plants including all auxiliary
property on the site, or
(2) Any other nuclear reactor installation, including
laboratories handling radioactive materials in connection
with reactor installations, and critical facilities as such,
or
(3) Installations for fabricating complete fuel elements or for
processing substantial quantities of prescribed substances,
and for reprocessing, salvaging, chemically separating,
storing or disposing of spent nuclear fuel or waste
materials, or
(4) Installations other than those listed in (3) above using
substantial quantities of radioactive isotopes or other
products of nuclear fission.
3. Without in any way restricting the operation of paragraphs 1 and 2
of this clause, this Contract does not cover any loss or liability by
radioactive contamination accruing to the Reassured, directly or indirectly, and
whether as Insurer or Reinsurer from any insurance on property which is on the
same site as a nuclear reactor power plant or other nuclear installation and
which normally would be insured therewith, except that this paragraph 3 shall
not operate.
(a) where the Reassured does not have knowledge of such nuclear
reactor power plant or nuclear installation, or
(b) where the said insurance contains a provision excluding
coverage for damage to property caused by or resulting from
radioactive contamination, however caused.
4. Without in any way restricting the operation of paragraphs 1, 2 and
3 of this clause, this Contract does not cover any loss or liability by
radioactive contamination accruing to the Reassured, directly or indirectly, and
whether as Insurer or Reinsurer, when such radioactive contamination is a named
hazard specifically insured against.
5. This clause shall not extend to risks using radioactive isotopes in
any form where the nuclear exposure is not considered by the Reassured to be the
primary hazard.
6. The term "prescribed substances" shall have the meaning given it by
the Atomic Energy Control Act R.S.C. 1946 c.37 or by any law amendatory thereof.
7. The Reassured to be sole judge of what constitutes:
(a) substantial quantities, and
(b) the extent of installation, plant or site.
-1-
NOTE:- Without in any way restricting the operation of paragraph 1 of
this clause, it is 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.
-2-
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - CANADA
Applicable to policies in effect prior to January 1, 1985.
1. This Contract 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 Contract 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, 1962, shall be deemed to
include, from their inception dates and thereafter, the following provision:-
Limited Exclusion Provision
This Policy does not apply to injury, sickness, disease,
death, damage or destruction with respect to which an Insured under
this Policy is also insured under a contract of nuclear energy
liability insurance (whether the Insured is named in such contract or
not 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 damage to or destruction of property.
3. Without in any way restricting the operation of paragraph 1 of this
clause it is agreed that for all purposes of this Contract 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, 1962, shall be deemed to include, from
their inception dates and thereafter, the following provision:-
Broad Exclusion Provision
This Policy does not apply to injury, sickness, disease,
death, damage or destruction
(a) with respect to which an Insured under this Policy is
also insured under a contract of nuclear energy
liability insurance (whether the Insured is named in
such contract or not 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; or
(b) resulting directly or indirectly from the nuclear
energy hazard arising from:
(1) the ownership, maintenance,
operation or use of a nuclear
facility by or on behalf of an
Insured;
(2) 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
(3) the transportation, consumption,
possession, handling, disposal or
use of radioactive material (other
than radioisotopes away from a
nuclear facility) sold, handled,
used or distributed by an Insured.
As used in this Endorsement:
(i) The term "nuclear energy hazard"
means the radioactive, toxic,
explosive or other hazardous
properties of radioactive material;
(ii) 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;
(iii) 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
xxxxxxxx xxxx 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 and
uranium 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.
-2-
(iv) With respect to property, loss of
use of such property shall be deemed
to be damage to or destruction of
property.
-3-
NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE -
REINSURANCE - CANADA
Rev. 83
Applicable to policies becoming effective on and after
January 1, 1985.
(See Note)
1. This Agreement does not cover any loss or liability accruing to the Company,
directly or indirectly, and whether as Insurer or Reinsurer, from any Pool of
Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear
Energy risks.
2. Without in any way restricting the operation of paragraph 1 of this clause,
this Agreement does not cover any loss or liability accruing to the Company,
directly or indirectly, and whether as Insurer or Reinsurer, from any insurance
against Physical Damage (including business interruption or consequential loss
arising out of such Physical Damage) to:
(1) Nuclear reactor power plants including all auxiliary property on
the site, or
(2) Any other nuclear reactor installation, including laboratories
handling radioactive materials in connection with reactor
installations, and critical facilities as such, or
(3) Installations for fabricating complete fuel elements or for
processing substantial quantities of prescribed substances, and
for reprocessing, salvaging, chemically separating, storing or
disposing of spent nuclear fuel or waste materials, or
(4) Installations other than those listed in (3) above using
substantial quantities of radioactive isotopes or other products
of nuclear fission.
3. Without in any way restricting the operation of paragraphs 1 and 2 of this
clause, this Agreement does not cover any loss or liability by radioactive
contamination accruing to the Company, directly or indirectly, and whether as
Insurer or Reinsurer from any insurance on property which is on the same site as
a nuclear reactor power plant or other nuclear installation and which normally
would be insured therewith, except that this paragraph 3 shall not operate.
(a) where the Company does not have knowledge of such
nuclear reactor power plant or nuclear installation,
or
(b) where the said insurance contains a provision
excluding coverage for damage to property caused by
or resulting from radioactive contamination, however
caused.
4. Without in any way restricting the operation of paragraphs 1, 2 and 3 of this
clause, this Agreement does not cover any loss or liability by radioactive
contamination accruing to the Company, directly or indirectly, and whether as
Insurer or Reinsurer, when such radioactive contamination is a named hazard
specifically insured against.
5. This clause shall not extend to risks using radioactive isotopes in any form
where the nuclear exposure is not considered by the Company to be the primary
hazard.
6. The term "prescribed substances" shall have the meaning given it by the
Atomic Energy Control Act R.S.C. 1974 or by any law amendatory thereof.
7. The Company to be sole judge of what constitutes:
(a) substantial quantities, and
(b) the extent of installation, plant or site.
8. Without in any way restricting the operation of paragraphs 1, 2, 3 and 4 of
this clause, this Agreement does not cover any loss or liability accruing to the
Company, directly or indirectly, and whether as Insurer or Reinsurer caused by
any nuclear incident as defined in The Nuclear Liability Act, nuclear explosion
or contamination by radioactive material.
NOTE: In addition, this clause is applicable to all original contracts
of the Company in effect on and after January 1, 1985 whether
new, renewal or replacement which incorporate a nuclear
incident/radioactive contamination exclusion as contained in Form
IBC 1105 1-82.
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY -REINSURANCE CANADA
REV. 83
Applicable to policies becoming effective on and after
January 1, 1985.
(See Note)
1. This Agreement does not cover any loss or liability accruing to the
Company 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 Agreement all the original
liability contracts of the Company, 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 injury, sickness, disease,
death, damage or destruction with respect to which an Insured under
this Policy is also insured under a contract of nuclear energy
liability insurance (whether the Insured is named in such contract or
not 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 damage to or destruction of property.
3. Without in any way restricting the operation of paragraph 1 of this
clause it is agreed that for all purposes of this Agreement all the original
liability contracts of the Company, 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 (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:
-1-
(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
xxxxxxxx xxxx 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, 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;
-2-
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 damage to or destruction of
property.
NOTE: In addition, the clause is applicable to all the original
liability contracts of the Company in effect after January 1,
1985 whether, new, renewal or replacement of any class
whatsoever, (other than Personal Liability, Farmers Liability,
Storekeepers Liability or Automobile Liability contracts) which
incorporate a Nuclear Energy Liability Exclusion as contained in
Form IBC 2000 1-83.
-3-
CANADA
------
NUCLEAR EXCLUSION CLAUSE - PHYSICAL DAMAGE AND LIABILITY
(BOILER AND MACHINERY POLICIES) - REINSURANCE
(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 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.
