Special acceptance

A property cedant has a ten-line surplus treaty, a refinery exclusion and a territory limited to Europe. A refinery in Morocco comes in. Rather than set up a facultative placement for that single risk, the cedant asks the treaty reinsurers for a special acceptance. It is a written agreement, specific to that risk, bringing it into the treaty on treaty terms. The practice comes from London, where property and energy treaties often carry a clause that organizes it, and it serves as much to lift an exclusion by class as to go beyond capacity or territory. Once specially accepted, the risk follows the treaty in everything: same share, same commission, same claims settlement. Everything turns on proof. Consent given over the phone, or by the leader alone when the treaty requires each reinsurer to agree, is worthless on the day the refinery burns and a following reinsurer rereads the exclusion. Cedants therefore keep a special acceptance register, with the date, the risk, the duration (often the policy period, sometimes only the treaty year) and the name of each signatory. At renewal the question comes back: does an acceptance given for the prior year still cover the renewed risk? The wording of the agreement has to say so. Not to be confused with facultative reinsurance, where the risk leaves the treaty and is placed separately. Fac-oblig is different again: the reinsurer has committed in advance to take whatever the cedant chooses to cede within a defined frame.