Commutation
Commutation describes the early liquidation of a contract for some consideration. There are many aspects to a commutation deal, ranging from an in-depth technical evaluation of loss experience and contractual exposures to the psychology of a horse trade.
Often the form of a financial transaction greatly affects the reception which a commutation deal will receive from supporting counterparties (such as reinsurers). Poorly structured commutations whose scope includes the settlement of contingent (IBNR) claims are likely to damage a cedant’s ability to collect reinsurance.
Our range of experience in the field is diverse and we have developed a specialist web-site designed to manage commutation work-flow (see www.runoffcentre.com)
London: