Page 416 - Misc Ebook IC 78

The Insurance Times

reinsurances.(c) Pool basis - A common pool fund
is created which is used for claim settlement.

(ii) Non Proportional Treaty -
(a) Excess of loss - Here the ceding company bears

up to a fixed sum of loss in respect of a claim or
claims arising out of a single event in a particular
class of business.

This limit up to which the ceding company bears
losses arising out of single event is called the 'loss'
or 'underlying net' retention of the ceding company.

Any loss beyond the ceding company's loss retention
is to be borne by the excess of loss reinsurers. In
consideration of the cover given by the reinsurers
to the ceding company.

The ceding company pays a definite percentage of
the premium in respect of the entire business. Under
the excess of loss arrangement it is usual not to
provide for any agency commission terms.

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