{
  "id": "clause-cut-through",
  "type": "clause",
  "languages": {
    "en": {
      "id": "clause-cut-through",
      "lang": "en",
      "type": "clause",
      "title": "Cut-Through Clause",
      "shortDefinition": "A cut-through clause gives the policyholder or claimant a direct payment claim against the reinsurer if the primary insurer – typically a fronting company – fails.",
      "synonyms": [
        "Direct access clause"
      ],
      "linesOfBusiness": [
        "Reinsurance",
        "International programmes"
      ],
      "jurisdictions": [
        "Global"
      ],
      "tags": [
        "Contract clauses",
        "Counterparty risk"
      ],
      "relations": {
        "relatedTerms": [
          "term-fronting",
          "term-captive",
          "term-cedent"
        ],
        "partOf": [],
        "appliesTo": [
          "term-treaty-reinsurance",
          "term-facultative-reinsurance"
        ],
        "regulatedBy": [],
        "relevantFor": [],
        "insurableVia": [],
        "mitigatedBy": [],
        "comprises": [],
        "alternativeTo": [],
        "complementedBy": []
      },
      "attribute": null,
      "profile": null,
      "coverageProfile": null,
      "clause": {
        "kind": "extension",
        "origin": "reinsurance-market",
        "favours": "insured",
        "negotiability": "bespoke",
        "standardWordings": []
      },
      "legalBasis": [],
      "standards": [],
      "reviewStatus": "expert-reviewed",
      "reviewedBy": "Guido Hesse, Hesse Group Holding AG",
      "lastReviewed": "2026-09-04",
      "version": "0.2.0",
      "updated": "2026-09-03",
      "generated": {
        "by": "cursor-agent/claude-sonnet-5",
        "at": "2026-09-03T00:00:00.000Z"
      },
      "verified": [
        {
          "by": "human:ghesse",
          "at": "2026-09-04T00:00:00.000Z",
          "method": null
        }
      ],
      "staleAfter": null,
      "url": "https://hgh.ch/lexikon/en/knowledge/clause/cut-through-clause/",
      "alternateUrl": "https://hgh.ch/lexikon/de/wissen/klausel/cut-through-klausel/",
      "body": "## Purpose\n\nA cut-through clause gives the policyholder or claimant a direct payment claim against the reinsurer if the primary insurer – typically a fronting company – fails. Cut-through clauses appear mainly in fronting structures: the policyholder does not want to bear the fronter's credit risk when, economically, the captive or a strong reinsurer holds the risk anyway.\n\n## Effect and limits\n\nThe clause breaks the principle that reinsurance operates only in the internal relationship. Its enforceability varies considerably between jurisdictions – particularly in insolvency, where it may conflict with equal treatment of creditors and set-off prohibitions. Local legal opinions are essential for critical programmes.\n\n## Negotiation and practice\n\nWhere cut-through is not enforceable, security instruments such as trust accounts, letters of credit or rating triggers mitigate counterparty risk. The clause is negotiated individually per programme and is rarely a market standard."
    },
    "de": {
      "id": "clause-cut-through",
      "lang": "de",
      "type": "clause",
      "title": "Cut-Through-Klausel",
      "shortDefinition": "Die Cut-Through-Klausel räumt dem Versicherungsnehmer oder Geschädigten einen direkten Zahlungsanspruch gegen den Rückversicherer ein, falls der Erstversicherer – typischerweise ein Fronter – ausfällt.",
      "synonyms": [
        "Direktanspruchsklausel"
      ],
      "linesOfBusiness": [
        "Rückversicherung",
        "Internationale Programme"
      ],
      "jurisdictions": [
        "Global"
      ],
      "tags": [
        "Vertragsklauseln",
        "Gegenparteirisiko"
      ],
      "relations": {
        "relatedTerms": [
          "term-fronting",
          "term-captive",
          "term-cedent"
        ],
        "partOf": [],
        "appliesTo": [
          "term-treaty-reinsurance",
          "term-facultative-reinsurance"
        ],
        "regulatedBy": [],
        "relevantFor": [],
        "insurableVia": [],
        "mitigatedBy": [],
        "comprises": [],
        "alternativeTo": [],
        "complementedBy": []
      },
      "attribute": null,
      "profile": null,
      "coverageProfile": null,
      "clause": {
        "kind": "extension",
        "origin": "reinsurance-market",
        "favours": "insured",
        "negotiability": "bespoke",
        "standardWordings": []
      },
      "legalBasis": [],
      "standards": [],
      "reviewStatus": "expert-reviewed",
      "reviewedBy": "Guido Hesse, Hesse Group Holding AG",
      "lastReviewed": "2026-09-04",
      "version": "0.2.0",
      "updated": "2026-09-03",
      "generated": {
        "by": "cursor-agent/claude-sonnet-5",
        "at": "2026-09-03T00:00:00.000Z"
      },
      "verified": [
        {
          "by": "human:ghesse",
          "at": "2026-09-04T00:00:00.000Z",
          "method": null
        }
      ],
      "staleAfter": null,
      "url": "https://hgh.ch/lexikon/de/wissen/klausel/cut-through-klausel/",
      "alternateUrl": "https://hgh.ch/lexikon/en/knowledge/clause/cut-through-clause/",
      "body": "## Zweck\n\nCut-Through-Klauseln räumen dem Versicherungsnehmer oder Geschädigten einen direkten Zahlungsanspruch gegen den Rückversicherer ein, falls der Erstversicherer – typischerweise ein Fronter – ausfällt. Sie finden sich vor allem in Fronting-Konstruktionen: Der Versicherungsnehmer will nicht das Bonitätsrisiko des Fronters tragen, wenn wirtschaftlich ohnehin die Captive oder ein starker Rückversicherer das Risiko hält.\n\n## Wirkung und Grenzen\n\nDie Klausel durchbricht den Grundsatz, dass Rückversicherung nur im Innenverhältnis wirkt. Ihre Durchsetzbarkeit variiert je nach Rechtsordnung erheblich – insbesondere im Insolvenzfall, wo sie mit Gläubigergleichbehandlung und Aufrechnungsverboten kollidieren kann. Lokale Rechtsgutachten sind für kritische Programme unerlässlich.\n\n## Verhandlung und Praxis\n\nWo Cut-Through nicht durchsetzbar ist, mindern Sicherheiten wie Trust-Konten, Letters of Credit oder Rating-Trigger das Gegenparteirisiko. Die Klausel wird individuell je Programm verhandelt und ist selten Marktstandard."
    }
  }
}