Treaty wording
The full contract text of a treaty, setting definitions and clauses beyond the economic terms of the slip.
The wording is the contract document that gives legal force to a placement whose slip settled only the economics: scope, attachment, limit, premium and shares. It carries everything else, and everything else is what decides a claim: the definition of an occurrence, the hours clause, exclusions, reinstatement mechanics, governing law, arbitration, and the sanction for late notification. It closes the gap between the commercial deal, struck fast at the renewal table, and the legal deal, which takes weeks. The market long tolerated wordings signed months after inception, or never. The parties were then covered by a document whose terms they had never discussed. The World Trade Center litigation of 2001 exposed that drift and led to the discipline known as contract certainty: a complete, agreed text before inception. A sound wording is not drafted at the claim. It is negotiated while no one yet has an interest in reading it one way.
The litigation arising from the attacks of September 11, 2001 turned on a question the slip did not settle: one occurrence or two. The answer was worth 3.5 billion dollars. Several policies and retrocessions had no signed wording, and the courts had to reconstruct the parties' intent from exchanged drafts. The UK Financial Services Authority imposed contract certainty in 2005, with a target of 85 percent of contracts complete at inception.
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