Insolvency clause

{
  "id": "MLC-T-INS-001842",
  "term": "Insolvency clause",
  "field": "Insurance and risk management",
  "definition": "A provision in a reinsurance agreement that obligates the reinsurer to make payments for covered losses even if the ceding insurer becomes insolvent and cannot pay its own claims. This clause prevents the reinsurer from using the ceding company's bankruptcy as a defense against its payment obligations to the company's liquidator or receiver. Most jurisdictions require this clause in reinsurance contracts to protect policyholders.",
  "url": "https://mlchart.com/terminology/insurance/insolvency-clause/"
}