NEW ZEALAND LOCAL GOVERNMENT INSURANCE CORPORATION LTD v R+V VERSICHERUNG AG

[2013] NZHC 690, New Zealand High Court, Justice Mackenzie, 9 April 2013

Reinsurance - Excess of loss treaty - Loss settlements clause - Limit of indemnity - Aggregation of losses

The claimant reinsured was covered by the reinsurers, including the defendant reinsurer, under an excess of loss treaty. The treaty contained a "loss settlements" clause under which "All loss settlements made by the Reinsured, provided that they are within the terms and conditions of the original policies in respect of the business covered hereunder and of this Reinsurance, shall be binding upon the Reinsurers ..." The limts of indemnity and the deductibles were: "NZD39,600,000 any one loss, any one risk in excess of NZD5,400,000 any one loss, any one risk ... The Reinsured's share of all retained losses arising from one event is limited to NZD10,800,000. ... Any original Property Risk with a limit in excess of NZD66,666,667 can be ceded automatically to this reinsurance (up to NZD100,000,000), however reinsurers are to be notified of such cessions within 30 days of attachment". There was also a reinstatement clause under which: