A clause in a REINSURANCE contract that requires the REINSURER to provide coverage to an underlying INSURED if the INSURER cannot fulfill its obligations under the policy CEDED. A dropdown is most common in a FACULTATIVE REINSURANCE agreement where individual policies are analyzed and accepted.

More On This Topic

Link to This Definition
Did you find this definition of DROPDOWN helpful? You can share it by copying the code below and adding it to your blog or web page.
Written and fact checked by The Law Dictionary