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    Adolf Hittler
    Reinsurance is when an insurer transfers some of the risk it has already insured to another insurer, known as the reinsurer. A cut-through clause in a reinsurance contract allows a third party like another reinsurer, insurance company, or policyholder to access funds or rights from the agreement. Cut-through clauses aim to avoid insolvency risk, guarantee claims payment, help ceding insurers attract clients, assist new ceding companies, and allow reinsurers to provide services where not licensed.

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    Short 5

    Uploaded by

    Adolf Hittler
    14 views1 page
    Reinsurance is when an insurer transfers some of the risk it has already insured to another insurer, known as the reinsurer. A cut-through clause in a reinsurance contract allows a third party like another reinsurer, insurance company, or policyholder to access funds or rights from the agreement. Cut-through clauses aim to avoid insolvency risk, guarantee claims payment, help ceding insurers attract clients, assist new ceding companies, and allow reinsurers to provide services where not licensed.

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    Reinsurance is when an insurer transfers some of the risk it has already insured to another insurer, known as the reinsurer. A cut-through clause in a reinsurance contract allows a third party like another reinsurer, insurance company, or policyholder to access funds or rights from the agreement. Cut-through clauses aim to avoid insolvency risk, guarantee claims payment, help ceding insurers attract clients, assist new ceding companies, and allow reinsurers to provide services where not licensed.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    14 views1 page

    Short 5

    Uploaded by

    Adolf Hittler
    Reinsurance is when an insurer transfers some of the risk it has already insured to another insurer, known as the reinsurer. A cut-through clause in a reinsurance contract allows a third party like another reinsurer, insurance company, or policyholder to access funds or rights from the agreement. Cut-through clauses aim to avoid insolvency risk, guarantee claims payment, help ceding insurers attract clients, assist new ceding companies, and allow reinsurers to provide services where not licensed.

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    Short 5

    When an insurer transfer a part of his risk on a particular insurance by insuring it with another
    insurer or others insures is call reinsurance. Simply it means insuring again by the insurer of risk
    already insured. It transfer the part of the risk that a direct insurer assumes by way of insurance
    contract on the behalf of an insured , to a second insurance carrier, the reinsurer who has no
    direct relation with the insured.

    A cut-through clause is a reinsurance contract provision that allows a party, other than ceding
    company and Reinsurance Company to have right under the agreement. A cut-through clause
    might allow the third party, such as another reinsurer, insurance company, or policyholder to
    gain access to funds.

    The objective of the "cut through clause" incorporated in reinsurance contract are:

     Avoid the risk associated with insurance insolvency, including having to file claim with
    states guarantee fund or with insurer is insolvent estate.
     Allows third parties such as reinsurers, insurance companies and policy holders to
    modify the original reinsurance agreement and gain access to funds or right within that
    agreement.
     To provide policyholder benefit from added protection provided by the cut-through
    provisions.
     It helps the ceding insurers by guarantee claims payment, which allows a company that
    may not typically be able to attract larger commercial clients.
     It provides reinsurer the opportunity to assist a new ceding company that has not yet
    developed a sufficient financial rating to do business.
     It allows the reinsurers to provide services in areas where it may not be licensed.
     It helps to prevent one insurer from enduring the brunt of payouts following a major
    event such as a natural disaster.

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