Analysis of LMA5394
About LMA5394
Drafted by the Lloyd’s Market Association (LMA) and released in March 2020, LMA5394 is a Communicable Disease Exclusion for property treaty reinsurance.
Clause 1: the Communicable Disease Exclusion
At its broadest, LMA5394 excludes damage or loss ‘in connection with’:
- a Communicable Disease; or
- the fear or threat of a Communicable Disease.
Furthermore, LMA5394 is explicit that this exclusion will apply regardless of any other cause or event which may have contributed to the damage or loss.
Clause 2: definition of ‘Communicable Disease’
In clause 2 of LMA5394, ‘Communicable Disease’ is defined as ‘any disease which can be transmitted… from any organism to another organism’. Requiring the disease to be transmissible between organisms does qualify the scope of the definition; food poisoning, for example, would not be excluded as a ‘Communicable Disease’ because it is transmitted by the ingestion of contaminated food or water, not by a pathogen that is transmitted between organisms.
Beyond this,
- sub-clause 2.1 inclusively identifies types of pathogens;
- sub-clause 2.2 inclusively identifies means of transmission; and,
- sub-clause 2.3 identifies possible effects of the disease or pathogen.
None of these sub-clauses, however, are essential to the operation of the endorsement.