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Posts Tagged ‘Aggregate Extension Clauses’

Reinsurance Nuts & Bolts: What is an Aggregate Extraction Clause?

August 10th, 2010 Accumulation of Loss, Aggregate Cover, Nuts & Bolts, Nuts & Bolts: Reinsurance, Reinsurance Allocation, Reinsurance Claims Comments Off on Reinsurance Nuts & Bolts: What is an Aggregate Extraction Clause?

A.   Introduction

Over a year ago we ran a Reinsurance Nuts & Bolts feature entitled “Aggregate Extension Clauses”  (here).  To our considerable surprise, that article was, and remains, one of our more popular ones. 

At the close of the article we said (tongue in cheek):  “If you, the reader, have gotten this far, then perhaps you would like to delve into a discussion of ‘Aggregate Extraction Clauses.’  But these clauses – which conjure up some of the more frightening scenes from Marathon Man (1976) – are better left for another day.  .  .  . ”  Brace yourselves, for we fear that day has arrived.  .  .  .       Continue Reading »

Reinsurance Nuts & Bolts: Aggregate Extension Clauses in Excess-of-Loss Reinsurance Contracts

June 1st, 2009 Nuts & Bolts, Nuts & Bolts: Reinsurance Comments Off on Reinsurance Nuts & Bolts: Aggregate Extension Clauses in Excess-of-Loss Reinsurance Contracts


I remember when I first heard the term “aggregate extension clause.”  I was a couple of years out of law school and just getting my feet wet in reinsurance law and practice.  Naturally, I had no idea of what an aggregate extension clause was or, for that matter, why someone would want to call something an “aggregate extension clause” in the first place, unless the principal objective was to confuse the reader.  I envisioned some densely worded, obtuse, complex and hopelessly confusing provision designed to accomplish some obscure yet important purpose, the relevance of which was surely beyond my ken.  I decided  that I could read up on the clause, or ask a colleague about it, but I feared that the explanation – written or oral – would be at least as difficult to decipher as the clause itself, and probably more so.  So I did my best to avoid even having to think about aggregate extension clauses — let alone deal with them — for as long as possible.

Eventually, of course, I had to face my fears and grapple with the seemingly elusive concept of “aggregate extension.”  I quickly learned that my initial assessment was only partly correct:  aggregate extension clauses are indeed densely worded, but the purpose of the clause is far more straightforward than I once assumed.  Once I learned a little bit about the clause, I realized (or at least thought) that I could impress – or perhaps awe – my less experienced colleagues with it, and might even be able to use it to show my more experienced colleagues that I knew something about reinsurance.   While I can’t say I obtained as much mileage out of my newfound knowledge as I expected,  I am nevertheless glad that I invested a little time into learning about aggregate extension clauses.

In this Reinsurance Nuts & Bolts post we briefly discuss in very simple and basic terms what an aggregate extension clause is, and what it does.  We also provide the reader with an example of some of the operative wording of an aggregate extension clause.  Our discussion is not intended to be comprehensive; if anything, it is oversimplified.  But it should give the reader a basic understanding of the topic.    Continue Reading »