Dictionary of Insurance Terms: strike-through clause (cut-through clause)
strike-through clause (cut-through clause)
provision that holds a reinsurer liable for its share of losses even if the ceding company becomes insolvent before paying these losses. For example, XYZ Insurance Co. writes a fire policy for Acme Manufacturing and then reinsures 80% of the risk with ABC Reinsurance. XYZ is declared insolvent. Then Acme Manufacturing burns to the ground. ABC Reinsurance would be responsible for the 80% of the risk it reinsured and would pay the claim directly to Acme.
