Bermuda Form
An excess liability policy form born in Bermuda in 1986, combining an occurrence-reported basis, modified New York law and arbitration in London to avoid US juries.
In the mid-1980s, the US liability market went through a capacity crisis: courts applied old policies, written on an occurrence basis, to asbestos and pollution claims revealed decades later, and insurers withdrew from high layers. Large US industrial groups then set up new insurers in Bermuda, and a policy form designed to avoid the flaws that had ruined the market. Three choices define it. The occurrence-reported basis: cover applies to damage occurring during the period, provided it was reported during that same period, which shuts the door to latent claims revealed years later. The governing law: New York law, but modified by the policy on specific points, notably setting aside construction against the drafter. Dispute resolution: arbitration in London, under the English Arbitration Act, confidential and without a jury, which removes the insurer from exceptional verdicts. The Bermuda Form became the benchmark for high liability layers of large US companies, notably for products liability. It illustrates how a policy wording can organize the choice of judge as much as the scope of cover.
Textbook case: a US pharmaceutical company places its 100 million excess of 300 million layer on a Bermuda Form. Sued in a class action over a side effect, it reports the claim; the dispute with its insurers over the recalled products exclusion is decided by an arbitral tribunal sitting in London, without a jury.
Bermuda Form, Bermuda Form policy, occurrence reported
Follow the research
One letter a week. First, the week's underwriting note, when one is published: a dated, argued decision, signed by Paul Bernardski. Then what the observatory published on cyber risk, political risk and insurance. No account, no tracking.
No spam, one-click unsubscribe, no data ever sold.