Most reinsurance contracts contain a “special termination” clause. The clause typically allows either party to terminate the contract early if certain contingencies arise. Unsurprisingly, there are myriad versions of the special termination clause ranging from versions that only allow the ceding insurer to terminate to mutual clauses that allow either party to terminate.
The underlying termination triggers (the “special circumstances”) also differ from contract to contract. As always, it is essential to read the details of the clause to understand how it works and what triggers the clause. This Expert Commentary will explore the special termination clause, its purpose, and how it has evolved.
