In this arrangement, the Surge Arrester is installed between phase and ground. The cut-out fuse is in series, and usually protects a transformer. Now, if the transformer is grounded, than a portion of the current shall go thru. Normally, the transformer insulation level (BIL) is at least as high as the line insulation, such that the lightning surge should first jump an insulator and go to ground. To have a lightning strike on a distribution line means that the line is a rural one, otherwise there are other striking points. In order to offer a better protection to the line, there are the following solutions:
1. the line should be bult with a protectiove conductor above
2. If the line is an existing one, can be improved by installing from place to place a set of surge arresters - for examople, each 1-2miles; this will have the effect of stopping the surge on line, before reaching critical equipment. How many you install depend on the isokeraunic indices of your area.
Still, more than likely is a problem of insualtion coordination (chek the BILs)