Contract certainty defined in simple terms is ensuring prior to a placement being concluded between underwriters, a cedant, and the brokers that all parties are clear and have understood the terms, conditions, and scope of coverage being agreed by all parties with respect to a particular contract.

Contract certainty can be divided into two core sections:

Preplacement Contract Certainty:
During Preplacement, the brokers ensure that the placing slip, associated underwriting information, and other information has been communicated identically to both cedant and reinsurer prior to placement.

Post Placement Contract Certainty:
Most commonly reflected in a broker’s cover note and respective closing documents, brokers within thirty days must ensure a single uniform document has been produced, signed, and forwarded to both cedant and reinsurers
allowing normally fourteen working days for any ammendments, discrepancies, or endorsements to be affective.

A contract certain organization needs to look at every aspect of the placing process. Cedants beware! The largest
gap in contract certainty almost always occurs during renewals where updated underwriting information is not properly or completely declared to the brokers and underwriters. Every cedant must treat every renewal as a new placement and ensure their brokers do just the same.

Otherwise, there will be trouble the next time a serious loss occurs!