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BACKGROUND EXPLANATION FOR AIMU'S
EXTENDED RADIOACTIVE CONTAMINATION EXCLUSION CLAUSE
Since the events of September 11, 2001, marine
and non-marine reinsurance markets in the United States and abroad
have been made aware and have grown concerned over the impact of
"NBC" terrorist events: losses which may arise from Nuclear,
Chemical or Biological means. Many professionals in the insurance
industry consider the losses that could arise from "NBC" type
terrorist event to be unquantifiable, and hence not insurable. In
November of 2002 the London Institute released two forms for use
on direct and reinsurance policies. The first addressed "Extended
RACE" and the second Chemical, Biological, Etc. exclusions.
At the beginning of this year (2003) American
reinsurers requested that "NBC" clauses be added to reinsurance
contracts for their American cedents on or about March 1, 2003.
This time period was allowed to give the American marine community
an opportunity to develop "NBC" clauses mutually agreeable to both
underwriters and reinsurers. With TRIA and other matters facing
insurers, this March 1st date was not met, but the
reinsurers were requesting implementation of these clauses as soon
as practicable.
In an attempt to develop "NBC" clauses that would achieve
consensus in the American market various committees of the AIMU
met. The Reinsurance Committee drafted an American version of the
London clauses. A Forms & Clauses committee made up of both direct
and reinsurance underwriters was also formed to review these
clauses and make suggested changes. The clause is the result of
these committees' efforts and may be placed on reinsurance
contracts.
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