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Claims
notified to original insurers but not reported by the reinsurer did
not entitle a retrocessionaire, which was increasing its share of the
cover, to avoid a quota share treaty for material non-disclosure or
misrepresentation in circumstances where it had requested information
about losses to date.
The reinsured,
Groupama, sought payment of unpaid claims from its reinsurer, Overseas
Partners, and an indemnity for future claims under a marine personal
accident quota share retrocession treaty. In the course of dealings,
Overseas Partners had increased its share of the retrocession cover
subject to satisfactory warranties "as to no losses incurred"
on the claimant's agent's programme. In fact, when the slip accepting
the increase was signed, four claims had been reported by the original
insureds to Lloyd's. Overseas Partners sought to avoid liability on
the basis of material non-disclosure or misrepresentation.
It was
held that a retrocessionaire was not entitled to avoid a quota share
treaty for material non-disclosure or misrepresentation where it had
requested information about losses to date from its reinsured but had
not been told about claims notified to the original insurers. The losses
which fell to be reported were losses known to Groupama's agent, that
is the agent's own losses, either paid or outstanding or a combination;
not losses incurred but not reported or claims where initial amounts
fell within policy deductibles. This was in accordance with normal market
practice. Overseas Partners were therefore liable on the treaty.
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