Page 220 - Reinsurance Management IC85

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The written premium is Rs.1200

The earned premium would be for 5 months
of expired risk that is Rs.500.

Q2. Discuss :
a) Cut through clause
b) Clean cut method of RI accounting
c) Line
d) Securitisation

Ans: a) Cut- through clause: this clause allows a party
not in privity with the reinsurer to have rights
against the reinsurer under the reinsurance
agreement. It is triggered on the ceding insurer’s
default in payment, insolvency, or upon entry of
liquidation or rehabilitation order, a time when
direct insured most needs the security.

b) Portfolio premium withdrawal takes care of
liability for unexpired risk at the cancellation date
or at the end of the treaty year. However, there
may be claims outstanding as on that date, the

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