The clause provides that in the event of the reinsured’s insolvency any part of a loss covered by reinsurance be paid directly to the original insured by the reinsurer. This is an exception to the legality of privity of contract.
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UK: A reinsurance clause providing that, in the event of insolvency of the cedant, the reinsurer will be liable to the insured for his share of the loss and not to the cedant’s liquidator.