Commutation clause

{
  "id": "MLC-T-INS-000858",
  "term": "Commutation clause",
  "field": "Insurance and risk management",
  "definition": "A provision within a reinsurance treaty that allows the parties to terminate their ongoing financial obligations for a specific block of business by agreeing to a final, lump-sum settlement. This clause provides a mechanism for reinsurers and ceding insurers to close out old treaties or manage their balance sheets more effectively. It typically outlines the conditions and methods for calculating the commutation payment.",
  "url": "https://mlchart.com/terminology/insurance/commutation-clause/"
}