![]() It was also submitted on behalf of the Syndicate that the use of the word “and” did not mean that Monument could keep brokerage on both the deposit premium and the minimum rate it simply meant that the same rate applied to both.Īnother argument put forward by Monument related to what they said would be the relative under-remuneration of the brokers in a soft market. The Syndicate disagreed and pointed out that the reinsurers were not entitled to be paid both the deposit premium and the full amount of the adjusted premium without taking account of the deposit premium already paid. This argument was principally based on the use of the word “and” in the brokerage provision which, the brokers argued, had to be read as being conjunctive and cumulative. The argument on the proper amount of brokerage due turned on the clause: “Brokerage: 15% applicable to deposit premium and minimum rate.” Monument argued that the natural and ordinary meaning of this clause was that brokerage was payable on both the minimum amount of premium payable and, in addition, also on the deposit premium. Preliminary issue one, which was the subject of the appeal, was phrased as follows: “Do the terms of the reinsurance contracts …on their proper construction entitle to charge brokerage on both (a) the deposit premium, and (b) the total adjusted premium (without deduction of the deposit premium)?” The court at first instance looked at four preliminary issues to determine whether the brokerage was due to Monument. Monument’s claim was predicated on the brokerage actually being due. Monument claimed total brokerage due to it of $9.2 million. ![]() Monument resisted onward payment of the claims to the Syndicate arguing that it was entitled to bring into account a number of claims for brokerage against the Syndicate either by way of net accounting or set-off. The Syndicate issued proceedings against Monument seeking recovery of over $8 million in claims that Monument had collected on the Syndicate’s behalf. Monument placed on behalf of the Syndicate a number of excess of loss reinsurance contracts and burning cost contracts. In this case the Court of Appeal held that the ordinary and natural meaning of the brokerage clause, when viewed against the background of the premium clause, did not entitle the reinsurance brokers to recover brokerage on the deposit premium twice. The courts will not however allow evidence to be given concerning the negotiations and subjective intent of the parties. In reaching its decision the Court of Appeal confirmed that, when interpreting clauses in insurance policy wordings, the courts will not review the wording in a vacuum and will take into account relevant admissible background material. The Court of Appeal recently dismissed Monument’s appeal, effectively holding that Monument were not entitled to receive brokerage on the deposit premium twice. At first instance it was held that Monument were only entitled to brokerage on the deposit premium as it became payable and on the minimum premium as the premium came to be adjusted, taking into account the deposit premium already paid. In this case the brokers, Monument, argued that they were entitled to be paid 15% brokerage based on the deposit premium and, in addition, brokerage on the total adjusted premium which amount included the deposit premium that had already been paid. This is usually subject to a minimum adjustment. ![]() Further amounts will become payable later on a fixed date or dates based on an adjustment applied to, for example, net premium income written to the facility. The deposit premium is usually a fixed amount payable either at the inception of the contract or in instalments. Reinsurance facilities often provide for payment by the reinsured of a minimum and deposit premium. In other words, the broker was not entitled to claim brokerage on the deposit premium twice. ![]() TCRU (formerly known as Monument Insurance Brokers Ltd) it was held that a broker who had arranged reinsurance providing for payment by the reinsured of a minimum and deposit premium, was only entitled to be paid brokerage on first, the deposit premium and, second, the total adjusted premium (also known as the minimum) taking into account the deposit premium already paid. In a recent judgment of the Court of Appeal (G Absalom (on behalf of all members of Lloyd’s Syndicate 957) v. ![]()
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