Question

What does the insolvency clause in reinsurance contracts ensure?

a.

Payment directly to the reinsured in case of insolvency

b.

Reduction of reinsurance payment due to insolvency

c.

Non-payment of claims in case of reinsurer's insolvency

d.

Payment directly to the insurer or its liquidator in case of insolvency

Posted under IC85 Reinsurance Management

Answer: (d).Payment directly to the insurer or its liquidator in case of insolvency Explanation:The insolvency clause, included in most reinsurance contracts, ensures that reinsurance payments are payable directly to the insurer or its liquidator in the event of the reinsured's insolvency. It prevents reduction of payment due to insolvency and ensures claims are honored.

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Q. What does the insolvency clause in reinsurance contracts ensure?
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