Annuity clauses
Over the years, the French reinsurance market has changed the conditions of the Civil Liability and Automobile Treaties to respond to the different situations of compensation for bodily injury. C ela has not made a concerted manner in the market, CONDUCT BEHAVIOR san t to a multiplicity of essays, with the problems of heterogeneity, consistency and therefore application and sometimes understanding .
The APREF has undertaken to analys er the magnitude of the problem by a comprehensive inventory of existing clauses in rationalization purposes and decided to offer the market a set of provisions to define a common repository.
These clauses aim to provide the market with transparency and comparability, they are in no way exclusive and can be used with variations desired by the various market operators.
In order to avoid any confusion between the different clauses governing compensation for bodily injury, it is essential to define the role of the following clauses :
Stabilization clause , the objective of which is to share the inflation of claims between insurers and reinsurers
Compensation annuity clause , the objective of which is to define the terms of their coverage
Clause of definitive net loss , the objective of which is to define the elements constituting the loss experience chargeable to the treaty.
In practice, the stabilization clause consists of recalculating, for each claim, the limits of the treaty by using a benchmark index throughout its development. Inflation is then measured by the ratio between the loss expressed in current currency and this same loss expressed in constant currency. It should be noted that these are purely theoretical claims charges, defined for the sole needs of this clause and without any link with the definitive net loss clause.
In practice, the indemnity annuity clause applies to each indemnity annuity making up a claim and must specify at least the following elements:
M odalities of cession to reinsurance , whether the annuity is indexed or not
E possible cases of pension revision or death of the victim,
M odalities for calculating the Constitutive Capital of Annuities,
M odalities of provisioning,
A efore and after their assignment and in the case of multiple annuities.
Finally, the definitive net loss clause comes into effect after the application of the stabilization and indemnity annuity clauses.
The 'APREF was limited to proposing a set of clauses - type for the most common cases (redemption or further monitoring associated with a stabilization clause), while deferring the choice of technical parameters in the special conditions of the treaties.
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