https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3AClaw-back_provision 2026-06-15T00:53:39Z Revision history for this page on the wiki MediaWiki 1.43.8 https://www.insurerbrain.com/w/index.php?title=Definition:Claw-back_provision&diff=10568&oldid=prev 2026-03-11T16:45:36Z

<p>Bot: Creating new article from JSON</p> <p><b>New page</b></p><div>🔄 &#039;&#039;&#039;Claw-back provision&#039;&#039;&#039; is a contractual mechanism in insurance and [[Definition:Reinsurance | reinsurance]] agreements that allows one party to recover funds previously distributed to another when specified conditions are triggered, such as adverse [[Definition:Loss development | loss development]] or failure to meet performance benchmarks. In [[Definition:Profit commission | profit commission]] arrangements between [[Definition:Cedant | cedants]] and [[Definition:Reinsurer | reinsurers]], for example, a claw-back clause ensures that commissions paid during profitable early periods can be recouped if subsequent [[Definition:Claims | claims]] deteriorate the account&#039;s results over the full evaluation horizon.<br /> <br /> 📑 The mechanics vary depending on the transaction. In a [[Definition:Quota share treaty | quota share treaty]] with a sliding-scale [[Definition:Ceding commission | ceding commission]], the claw-back is typically calculated at contract anniversaries or at final [[Definition:Commutation | commutation]]: if the [[Definition:Loss ratio (L/R) | loss ratio]] exceeds the threshold embedded in the sliding scale, the cedant refunds the excess commission already received. Similar provisions appear in [[Definition:Managing general agent (MGA) | MGA]] profit-share agreements, [[Definition:Lloyd&#039;s syndicate | Lloyd&#039;s syndicate]] managing-agent contracts, and [[Definition:Private equity | private-equity]]-backed carrier structures where investor distributions are subject to retrospective adjustment. Because the timing and magnitude of insurance losses are inherently uncertain, the contractual language must define the look-back period, netting methodology, and dispute-resolution process with precision.<br /> <br /> ⚠️ Without claw-back provisions, parties receiving upfront [[Definition:Commission | commissions]] or profit shares would have little financial exposure to long-tail deterioration, creating a moral hazard that could weaken [[Definition:Underwriting discipline | underwriting discipline]]. Regulators and [[Definition:Rating agency | rating agencies]] view well-structured claw-backs as a sign of aligned incentives—particularly in [[Definition:Delegated underwriting authority (DUA) | delegated authority]] programs where the underwriting decision-maker is one step removed from the capital provider. For [[Definition:Insurtech | insurtech]] MGAs negotiating capacity deals, understanding and accepting reasonable claw-back terms is often a prerequisite for securing partnerships with established [[Definition:Insurance carrier | carriers]].<br /> <br /> &#039;&#039;&#039;Related concepts:&#039;&#039;&#039;<br /> {{Div col|colwidth=20em}}<br /> * [[Definition:Profit commission]]<br /> * [[Definition:Ceding commission]]<br /> * [[Definition:Loss ratio (L/R)]]<br /> * [[Definition:Commutation]]<br /> * [[Definition:Delegated underwriting authority (DUA)]]<br /> * [[Definition:Quota share treaty]]<br /> {{Div col end}}</div>

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