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

Posted under IC85 Reinsurance Management

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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