Question

In what situations can a cut-through provision be used in reinsurance agreements?

a.

When the reinsurer is licensed in a particular country

b.

When the ceding insurer has a strong credit rating

c.

When the reinsurer intends to retain all the risk from the original policy

d.

When the reinsurer is in privity with the underlying insured

Answer: (c).When the reinsurer intends to retain all the risk from the original policy Explanation:A cut-through provision in reinsurance agreements can be used in situations where the reinsurer intends to retain all the risk from the original policy, such as in a fronting arrangement or when the reinsurer is not licensed in a particular country. It allows the underlying insured to benefit as a beneficiary under the contract, providing access to the reinsurer's coverage and payments.

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Q. In what situations can a cut-through provision be used in reinsurance agreements?

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