Leading and following market

On September 11, 2001, the World Trade Center property program, roughly 3.5 billion dollars per occurrence, was spread across about two dozen insurers who had signed binders before the final policy wording was agreed. Some had bound on the broker's form, which defined occurrence, others on different terms. In 2004, two New York juries had to decide, insurer by insurer, whether the two towers were one loss or two. That is what a slip costs when the followers did not all follow the same thing. Normally the lead underwriter negotiates rate, clauses, deductibles and exclusions with the broker and often takes the biggest line. The following market then commits capacity on the same terms without reopening the wording. Placement moves faster, and everything rides on the leader's technical reputation: a Lloyd's underwriter known for discipline moves the price far beyond the size of its share. After binding, the leader keeps control of endorsements and claims handling, alone or with a second agreement party, under the market agreements. Follow the settlements works differently. It is a reinsurance clause that binds a reinsurer to the cedent's settlements.