This Fronting Agreement (Insurance) is designed for situations where a licensed Danish insurer acts as a fronting company, issuing insurance policies to insureds while transferring the majority of the risk to a reinsurer. The agreement is particularly useful when the reinsurer lacks the necessary local licenses or regulatory approvals to directly write insurance business in Denmark or other covered territories. The document comprehensively addresses regulatory requirements under Danish law and EU regulations, including Solvency II requirements, and establishes the operational framework for policy issuance, premium collection, claims handling, and risk transfer. It includes specific provisions for compliance with Danish insurance regulations, financial services requirements, and data protection laws, making it suitable for both domestic and international insurance arrangements involving Danish-licensed insurers.
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Key Requirements PROMPT example:
Fronting Agreement (Insurance)
I need a Fronting Agreement (Insurance) for our Danish insurance company to act as fronting insurer for a German reinsurer, covering marine cargo risks in Scandinavia, with the agreement to commence from March 1, 2025, including specific provisions for claims handling and premium collection in local currencies.
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1. Parties: Identification of the fronting insurer and reinsurer, including full legal names, registration details, and addresses
2. Background: Context of the agreement, including the purpose of the fronting arrangement and the business relationship between the parties
3. Definitions: Detailed definitions of technical terms, including insurance-specific terminology and agreement-specific concepts
4. Appointment and Authority: Scope of the fronting insurer's authority and appointment of the reinsurer
5. Underwriting Guidelines: Parameters and requirements for risk acceptance, including limits, excluded risks, and territorial scope
6. Premium Handling: Procedures for premium collection, allocation, and settlement between parties
7. Claims Handling: Procedures for claims administration, settlement authority limits, and claims cooperation
8. Commissions and Fees: Structure and calculation of fronting fees, profit commissions, and other compensation
9. Reporting Requirements: Regular reporting obligations, including format, frequency, and content of reports
10. Regulatory Compliance: Obligations to comply with relevant insurance regulations and maintenance of licenses
11. Representations and Warranties: Standard and specific warranties from both parties
12. Term and Termination: Duration of the agreement, renewal provisions, and termination rights
13. Run-off Provisions: Handling of existing policies and claims post-termination
14. Confidentiality: Protection of confidential information and trade secrets
15. Governing Law and Jurisdiction: Application of Danish law and jurisdiction for dispute resolution
1. Collateral Requirements: Used when the fronting insurer requires security from the reinsurer, specifying form and amount of collateral
2. Claims Control Clause: Included when the reinsurer requires control over claims above certain thresholds
3. Cut-Through Provisions: Optional provisions allowing direct access by insureds to reinsurer in specific circumstances
4. Intermediary Involvement: Required when brokers or other intermediaries are involved in the arrangement
5. Sanctions Clause: Detailed provisions for compliance with international sanctions, particularly relevant for international business
6. Service Level Requirements: Included when specific performance metrics need to be maintained
7. Data Protection: Detailed GDPR compliance provisions when significant personal data processing is involved
8. Brand Usage: When the fronting insurer's brand needs to be used in policy documentation
1. Schedule A - Business Plan: Detailed business plan including projected premium volume, classes of business, and territories
2. Schedule B - Commission Structure: Detailed breakdown of commission calculations and payment terms
3. Schedule C - Reporting Templates: Standard formats for regular reporting requirements
4. Schedule D - Claims Handling Procedures: Detailed procedures for claims handling, including authority limits and escalation processes
5. Schedule E - Underwriting Guidelines: Detailed underwriting criteria, limits, and excluded risks
6. Schedule F - Service Levels: Specific service standards and performance metrics
7. Appendix 1 - Policy Wording Templates: Standard policy wordings to be used in the fronting arrangement
8. Appendix 2 - Required Forms and Documents: Templates for operational documents and forms
9. Appendix 3 - Contact Details: Key contact information for both parties' operational teams
Authors
