Definitions for "Insolvency clause"
A contractual provision, generally required by statute or regulation as a prerequisite to receiving credit for reinsurance, under which the REINSURER agrees, in the event of the CEDENT's insolvency, to pay its reinsurance obligations under the contract whether or not the insurer has paid its obligations.
A provision in reinsurance agreements that provides for the continuance of payments of the obligations of the reinsurer as though no ceding company insolvency had occurred, with appropriate recognition of additional expenses of the reinsurer caused by the insolvency. This provision is required in most states.
A provision in reinsurance agreements that provides for the continuance of payments of the obligations for the reinsurer as though no insolvency had occurred, with appropriate recognition of additional expenses of the reinsurer caused by the insolvency. Required in New York and in certain other states.