This clause gave Promiseland the sole right to settle the earthquake losses in any way it thinks fits.
Trust Alliance is responsible for its proportionate share of the claim and also for any expense specifically incurred excluding office expenses and salaries of officials of Promiseland.
The submission of bordereaux of paid losses and outstanding losses is required.
Promiseland is given the sole right to settle small amount losses because advising the latter of the small claims would involve Promiseland a great deal of work.
Promiseland is only required to give immediate notices, known as "Preliminary Loss Advice" (PLA) to the former when claims exceed a certain agreed amount.
In the event of a major loss, the financial standing of Promiseland could be jeopardized without the immediate recourse to a recovery from reinsurers.
Hence, a predetermined limit (cash call limit) is agreed in the reinsurance contract. If a claim exceeds this monetary limit, Trust Alliance will be called upon to reimburse Promiseland of its share of loss within 10 days.
If a claim did not exceed the limit (usually S$100,000), Trust Alliance will settle the claim using the Statement of Account.
This cash call limit helps Promiseland to allocate the earthquake loss so that Promiseland would be able to pay to its insured as soon as possible. This helps to minimize its consequential loss claims (Business Interruption losses). |
