Funds Withheld and LOC Clauses for Use in Cross-Border Reinsurance Contracts with Indian Cedants

The LMA has published two new model clauses - LMA5671 and LMA5672 - that can be used as a basis for negotiation of cross-border reinsurance contracts with Indian cedants.

These clauses are intended to be used as a starting point for negotiation with cedants who will need to comply with the new legislation introduced by IRDAI, however as the legislation is new and untested, underwriters may want to consider taking their own legal advice as to whether or not these clauses will meet their requirements.

All LMA model documents are purely illustrative and are published and distributed for the guidance of Lloyd’s managing agents, brokers and other market participants. All contracting parties are free to agree to different conditions/amend the model documents as they see fit; the LMA does not protect its intellectual property rights over model documents. It is for underwriters to decide whether any contractual language is acceptable on any given risk.

Ray Koh
Legal Counsel
ray.koh@lmalloyds.com