Question

What is the purpose of an errors and omissions clause in reinsurance agreements?

a.

To relieve both parties from any liability for inadvertent errors or omissions

b.

To impose greater liability on the reinsurers in case of errors or omissions

c.

To rectify any errors or omissions immediately upon discovery

d.

To maintain the liability of the parties regardless of errors or omissions

Posted under IC85 Reinsurance Management

Answer: (c).To rectify any errors or omissions immediately upon discovery Explanation:The purpose of an errors and omissions clause in reinsurance agreements is to ensure that any inadvertent errors or omissions on the part of either the reinsured or the reinsurers do not relieve the other party from liability. However, it also requires that such errors or omissions are rectified immediately upon discovery. The clause aims to maintain the liability of the parties while allowing for corrective action.

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Q. What is the purpose of an errors and omissions clause in reinsurance agreements?
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