letter or spirit?

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LETTER OR INTENTION?
ДУХ ИЛИ БУКВА?
GEORGE GRISHIN
OAKESHOTT INSURANCE, LONDON
APRIL 2011
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A MEETING IN SEVASTOPOL
CRÈME DE LA CRÈME IN MARINE
MARINE HULL TOTAL LOSS
FEBRUARY 2011.
POTI.
$700,000
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THE MAIN QUESTION:
IS IT COVERED?

NORMAL MARINE HULL TERMS & CONDITIONS

CHANGE OF FLAG – COVER AUTOMATICALLY
TERMINATED

THE VESSEL HAD TWO FLAGS, THE PERMANENT AND
THE TEMPORARY

THE ASSURED DID NOT ADVISE OF THE FLAG CHANGE

FLAG CHANGED FROM CAMBODIA TO UKRAINE

POSSIBLY, A RISK IMPROVEMENT, BUT HAD TO INFORM

COVER TERMINATED BEFORE THE LOSS
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THE ETERNAL QUESTION:
INTENTIONS OR LETTER PREVAIL?

THE MEETING STARTED WITH THE INSURERS CITING
GEORGE GRISHIN’S BOOK ON MARINE INSURANCE

IT SAID: “CHANGE OF FLAG – NO COVER”

WE SAID: “THERE ARE ALWAYS EXCLUSIONS TO THE
RULES”

CITED A LOSS 14 YEARS AGO: A VESSEL OF $5 MN WAS
LOST, AFTER A NON-ADVISED FLAG CHANGE. THE
UNDERWRITERS PAID

WILL THE LOCAL JUDGES AND REINSURERS
UNDERSTAND AN AMICABLE SETTLEMENT?
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WHAT WOULD A WESTERN
UNDERWRITER DO?

PROBABLY, REFER TO WARRANTIES =
СУЩЕСТВЕННЫЕ УСЛОВИЯ ДОГОВОРА

BREACH OF A WARRANTY >
TERMINATION OF THE CONTRACT

EVEN IF THE BREACH HAD
NO CONNECTION WITH THE LOSS

WARRANTY: FIRE EXTINGUISHERS IN EVERY ROOM.
LOSS: THEFT. NOT COVERED: BREACH OF WARRANTY

TOO HARSH FOR THE ASSURED.
GRADUALLY REMOVED IN CONSUMER LINES,
BUT NOT IN COMMERCIAL
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LONDON MARKET REFORM:
CONTRACT CERTAINTY

THE LONDON MARKET IS REFORMING

THE MAIN OBJECTIVE: CONTRACT CERTAINTY

THE POLICY OR THE INSURANCE DOCUMENT SHOULD BE
CLEAR FOR THE INSURER AND THE INSURED

THE MARKET REFORM IN LONDON – SINCE 2000

WWW.MARKETREFORM.CO.UK

THE MARKET REFORM CONTRACT = MRC

«Постреформенная проформа договора Лондонского
рынка»? (ППДЛР?)
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MARKET REFORM CONTRACT

UNIFIED CLAUSES. NOW, A UNIFIED CONTRACT.

THE MRC IS MADE UP OF THE FOLLOWING SECTIONS:

RISK DETAILS; DETAILS OF THE RISK/CONTRACT INVOLVED, SUCH AS
INSURED, TYPE, COVERAGE, CONDITIONS, ETC.

INFORMATION; FREE TEXT ADDITIONAL INFORMATION.

SECURITY DETAILS; INCLUDES REINSURER’S LIABILITY; ORDER
HEREON; BASIS OF WRITTEN LINES; BASIS OF SIGNED LINES, SIGNING
PROVISIONS, INSURER(S)/REINSURER(S) “STAMP” DETAILS. THESE
INDICATE EACH INSURER(S) SHARE OF THE RISK AND THEIR
REFERENCE(S).

SUBSCRIPTION AGREEMENT; THIS ESTABLISHES THE RULES TO BE
FOLLOWED FOR PROCESSING AND ADMINISTRATION OF POSTPLACEMENT AMENDMENTS AND TRANSACTIONS.

FISCAL AND REGULATORY; FISCAL AND REGULATORY ISSUES
SPECIFIC TO THE INSURERS INVOLVED IN THE RISK.

BROKER REMUNERATION & DEDUCTIONS – INFORMATION RELATING
TO BROKERAGE, FEES AND DEDUCTIONS FROM PREMIUM.
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MARKET REFORM CONTRACT

MRC СОСТОИТ ИЗ СЛЕДУЮЩИХ СЕКЦИЙ:

ДЕТАЛИ РИСКА: ДЕТАЛИ ЗАСТРАХОВАННОГО РИСКА/ДОГОВОРА, ТАКИЕ КАК
СТРАХОВАТЕЛЬ, ТИП, ПОКРЫТИЕ, УСЛОВИЯ И Т.Д.

ИНФОРМАЦИЯ: ДОПОЛНИТЕЛЬНАЯ ИНФОРМАЦИЯ ПО ПРОИЗВОЛЬНОЙ ФОРМЕ.

ДАННЫЕ ОБ УЧАСТВУЮЩИХ СТРАХОВЩИКАХ: ВКЛЮЧАЮТ
ОТВЕТСТВЕННОСТЬ (ПЕРЕ)СТРАХОВЩИКОВ, РАЗМЕЩАЕМУЮ ДОЛЮ, РАСЧЕТ
ПРИНЯТЫХ И ПОДПИСАННЫХ ДОЛЕЙ, УСЛОВИЯ ПРИНЯТИЯ, ДАННЫЕ
СТРАХОВЩИКОВ / ПЕРЕСТРАХОВЩИКОВ. ПОСЛЕДНИЕ УКАЗЫВАЮТ ДОЛЮ
КАЖДОГО И ИХ СПРАВОЧНЫЕ НОМЕРА.

СОГЛАШЕНИЕ О ПОДПИСАНИИ. ИМ УСТАНАВЛИВАЮТСЯ ОБЯЗАТЕЛЬНЫЕ
ПРАВИЛА ОБРАБОТКИ И АДМИНИСТРИРОВАНИЯ ИЗМЕНЕНИЙ И ДОПОЛНЕНИЙ
ПОСЛЕ ЗАКЛЮЧЕНИЯ ДОГОВОРА.

ФИНАНСОВАЯ И РЕГУЛЯТОРНАЯ: ДОПОЛНИТЕЛЬНАЯ ИНФОРМАЦИЯ ДЛЯ
УЧАСТВУЮЩИХ СТРАХОВЩИКОВ.

ВОЗНАГРАЖДЕНИЕ БРОКЕРА И ДРУГИЕ ВЫЧЕТЫ: ИНФОРМАЦИЯ ПО
БРОКЕРСКОЙ КОМИССИИ, ВОЗНАГРАЖДЕНИЯХ И ПРОЧИХ ВЫЧЕТАХ ИЗ
ПРЕМИИ.
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SUBJECTIVITY:
THE NEW WARRANTY?

A SUBJECTIVITY REPRESENTS A CONDITION THAT A POLICY
HOLDER MUST MEET BEFORE COVER WILL BE OFFERED. A
TYPICAL EXAMPLE IN PROPERTY INSURANCE WOULD BE
"SUBJECT TO A SATISFACTORY SURVEYORS REPORT".

SUBJECTIVITY – ЭТО УСЛОВИЕ, КОТОРОЕ
ПОЛИСОДЕРЖАТЕЛЬ ОБЯЗАН ВЫПОЛНИТЬ ДО ТОГО, КАК
ЕМУ БУДЕТ ПРЕДЛОЖЕНО ПОКРЫТИЕ. ТИПИЧНЫЙ
ПРИМЕР В СТРАХОВАНИИ ИМУЩЕСТВА – «С УСЛОВИЕМ
УДОВЛЕТВОРИТЕЛЬНОГО ОТЧЕТА ОБ ОСМОТРЕ».

ATTENTION! ISN’T THIS A NEW WARRANTY?
PROVIDING SOME GROUND FOR
A LOSS NON-PAYMENT?

MUCH CLEARER FORM – LOTS OF REQUIREMENTS
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HOW SERIOUS IS
A SUBJECTIVITY? – 1

SUBJECTIVITIES: GUIDANCE ON CONVERTING A
SUBJECTIVITY INTO A FULLY-CLAUSED CONDITION OF
THE INSURANCE CONTRACT

УСЛОВИЯ ДЕЙСТВИТЕЛЬНОСТИ ДОГОВОРА:
РУКОВОДСТВО ПО ПРЕОБРАЗОВАНИЮ SUBJECTIVITY В
ПОЛНОЕ УСЛОВИЕ ДОГОВОРА СТРАХОВАНИЯ
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HOW SERIOUS IS
A SUBJECTIVITY? - 2

“ISSUES MAY REMAIN OUTSTANDING AFTER INCEPTION, FOR
EXAMPLE AN OUTSTANDING SURVEY REQUIREMENT.
SUBJECTIVITIES SHOULD BE IMPOSED WITHIN THE PLACING
DOCUMENT. THE RESPONSIBILITIES AND TIMESCALES FOR
RESOLUTION, AND THE CONSEQUENCES OF FAILURE, MUST ALSO
BE CLEARLY SPECIFIED. WHERE SUBJECTIVITY IS OUTSTANDING
AT INCEPTION THEN IT MUST BE STATED AS A FULLY-CLAUSED
CONDITION OF THE COVER GIVEN.”

«ПОСЛЕ НАЧАЛА ДЕЙСТВИЯ ДОГОВОРА МОГУТ ОСТАТЬСЯ
НЕРАЗРЕШЕННЫЕ МОМЕНТЫ, НАПРИМЕР, ТРЕБОВАНИЕ
ПРЕДОСТАВЛЕНИЯ СЮРВЕЯ. SUBJECTIVITIES ДОЛЖНЫ
ВКЛЮЧАТЬСЯ В ОКОНЧАТЕЛЬНЫЙ ТЕКСТ ДОГОВОРА [В
РАЗМЕЩАЕМЫЙ ДОКУМЕНТ]. ОБЯЗАТЕЛЬСТВА И ВРЕМЕННЫЕ
РАМКИ ДЛЯ ИХ РАЗРЕШЕНИЯ, И ПОСЛЕДСТВИЯ НЕВЫПОЛНЕНИЯ
ИХ, ДОЛЖНЫ БЫТЬ ЧЕТКО ПРОПИСАНЫ. ЕСЛИ SUBJECTIVITY НЕ
ВЫПОЛНЕНО К НАЧАЛУ ДЕЙСТВИЯ ДОГОВОРА, ОНО ДОЛЖНО
БЫТЬ ВЫДЕЛЕНО В ОТДЕЛЬНОЕ УСЛОВИЕ ДОГОВОРА».
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HOW SERIOUS IS
A SUBJECTIVITY? – 3

3.2 A SUBJECTIVITY SHOULD SET OUT:

I) THE CONDITION/ACTION THAT NEEDS TO OCCUR, BY
WHOM AND TO WHAT STANDARD;

II) THE TIMESCALE, IF ANY, WITHIN WHICH THE
CONDITION IS TO BE MET;

III) THE TERMS WHICH ARE TO APPLY UNTIL THE
CONDITION IS MET; AND

IV) THE CONSEQUENCES WHICH ARE TO FOLLOW IF THE
CONDITION IS NOT MET.
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HOW SERIOUS IS
A SUBJECTIVITY? - 4

IV) POSSIBLE CONSEQUENCES:

ANY OF THE POSSIBLE TERMS REFERRED TO IN III) ABOVE;

IMPOSITION OF ADDITIONAL TERMS;

TERMINATION OF THE CONTRACT, WITH (RE)INSURERS CEASING TO BE UNDER ANY
LIABILITY WHATSOEVER, INCLUDING IN THE PERIOD BEFORE THE DEADLINE FOR
COMPLIANCE WITH THE CONDITION;

INSURERS COMING OFF RISK AND CEASING TO BE UNDER ANY FURTHER LIABILITY AS
FROM THE DATE OF NON-COMPLIANCE WITH THE CONDITION;

INSURERS NOT BEING UNDER ANY LIABILITY PROSPECTIVELY AND/OR
RETROSPECTIVELY IN RESPECT OF A PARTICULAR ASPECT OR ASPECTS OF
COVERAGE;

ADDITIONAL PREMIUM CHARGEABLE; AND/OR

THAT THE TERMS OF THE CONTRACT OF (RE)INSURANCE ARE OPEN TO RENEGOTIATION BY THE (RE)INSURERS.
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A SURVEY SUBJECTIVITY
“SURVEY CONDITION
THE INSURED SHALL PROVIDE TO THE INSURER A SURVEY REPORT ON [INSERT PROPERTY ADDRESS] SUCH REPORT TO BE PREPARED BY
[INSERT NAME OF SURVEYOR(S)] (“THE SURVEY”). THE SURVEY SHALL BE SO PROVIDED BY [INSERT TIME AND TIME ZONE] ON [INSERT DATE]
(“THE SURVEY DEADLINE”).
BETWEEN INCEPTION AND THE SURVEY DEADLINE, COVER IS PROVIDED BY THE INSURER ON THE TERMS AND CONDITIONS SPECIFIED IN THE
CONTRACT TO WHICH THIS CONDITION IS ATTACHED (“THE CONTRACT TERMS”).
WHERE THE SURVEY IS NOT SUBMITTED TO THE INSURER BY THE SURVEY DEADLINE COVER SHALL TERMINATE AT THE SURVEY DEADLINE.
WHERE THE SURVEY IS SUBMITTED TO THE INSURER BY THE SURVEY DEADLINE, COVER SHALL CONTINUE FROM THE SURVEY DEADLINE ON THE
CONTRACT TERMS UNTIL EXPIRY OF THE PERIOD OF THE CONTRACT UNLESS AND UNTIL TERMINATED IN ACCORDANCE WITH THE FOLLOWING
PARAGRAPH.
IN THE EVENT THAT THE SURVEY IS UNSATISFACTORY TO THE INSURER, THE INSURER SHALL HAVE THE RIGHT, WITHIN [ ] DAYS OF ITS RECEIPT,
TO TERMINATE THE CONTRACT BY SERVING NOT LESS THAN [ ] DAYS’ NOTICE IN WRITING TO THE INSURED AT THE INSURED’S ADDRESS AS
SHOWN IN THE CONTRACT, SUCH NOTICE EXPIRING NO EARLIER THAN THE SURVEY DEADLINE.
IN THE EVENT OF TERMINATION UNDER THIS SURVEY CONDITION, THE INSURED SHALL BE ENTITLED TO PRO RATA RETURN OF PREMIUM FOR
THE UNEXPIRED PERIOD OF THE CONTRACT UNLESS A LOSS HAS ARISEN FOR WHICH THE INSURED SEEKS INDEMNITY UNDER THIS CONTRACT
IN WHICH CASE THE INSURERS SHALL REMAIN ENTITLED TO THE FULL PREMIUM SPECIFIED IN THE CONTRACT TERMS.
TO THE EXTENT THAT THIS SURVEY CONDITION CONFLICTS WITH ANY OTHER CANCELLATION, NOTICE AND PREMIUM PROVISION IN THE
CONTRACT TERMS, THIS SURVEY CONDITION SHALL PREVAIL.”
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GOOD FOR THE ASSURED OR
THE INSURER?

FOR THE COMMON GOOD

THE PARTIES BETTER UNDERSTAND EACH OTHER INTENTIONS

WARRANTIES: IS “WARRANTED FIRE EXTINGUISHERS PROVIDED” – A
WARRANTY?

SUBJECTIVITES – USED MORE AND MORE OFTEN

NOT TOO MANY USE THEM PROPERLY

MARKET REFORM: EXPLAINING BOTH PARTIES THE RULES OF THE
GAME

SO AS TO ANSWER THE ETERNAL QUESTION: “IS IT COVERED?”
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THANK YOU FOR ATTENTION
WECANHELP@
OAKINSUR.COM