Question

Which of the following clauses allows the reinsured to cancel the reinsurance contract and then seek a new reinsurer if the reinsurer is downgraded by the rating organizations?

a.

PML excess clause

b.

Downgrade clause

c.

Loss occurrence clause

d.

Original conditions clause

Answer: (b).Downgrade clause Explanation:The downgrade clause allows the reinsured to cancel the reinsurance contract and seek a new reinsurer if the reinsurer is downgraded by the rating organizations. This clause provides the reinsured with the option to terminate the contract in the event of a downgrade in the reinsurer's financial strength or credit rating, ensuring the reinsured's protection and the ability to secure reinsurance coverage from a financially stable reinsurer.

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Q. Which of the following clauses allows the reinsured to cancel the reinsurance contract and then seek a new reinsurer if the reinsurer is downgraded by the rating organizations?

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