Original Conditions Clause
The original conditions clause requires the reinsurer to apply the same terms, rates and scope of cover as under the underlying original policy, unless the reinsurance contract expressly provides otherwise.
- Clause type
- Condition
- Origin/Market
- Reinsurance market
- Favours
- Insured
- Negotiability
- Market standard
Purpose
Particularly in facultative and proportional reinsurance, the reinsurer is meant to assume economically the same share of the risk that the cedent has underwritten. The original conditions clause (“as original”) ensures that the scope of cover, exclusions and terms of the reinsurance automatically follow the original policy’s terms, without having to repeat them individually in the reinsurance contract each time.
Effect and limits
If the cedent amends the original terms during the period, the reinsurance follows that change automatically – unless the reinsurance contract expressly excludes certain extensions of cover. The clause thus creates consistency between primary and reinsurance cover, but carries the risk that the reinsurer “automatically” assumes extensions it would not have underwritten individually.
Negotiation and practice
Reinsurers frequently negotiate exception lists (exclusions that are not covered even under the original policy) and notification or consent requirements for material changes to the original terms. The clause is a cornerstone of the principle of good faith in facultative reinsurance.