Page 417 - Misc Ebook IC 78

Miscellaneous Insurance

(b) Stop Loss - The same principle underlying the
excess of loss arrangement can be extended to
protect the ceding company not only in respect of
any loss arising out of a single event beyond its
loss retention, but also in respect of losses on its
entire net account relating to a particular class of
business.

Thus, the ceding company can so protect itself that
its net claims ratio for any accounting year does
not exceed a predetermined percentage.

Under this cover it is usual to fix an upper limit to
the liability of the excess of loss reinsurer.

Beyond this limit the balance falls back upon the ceding
company.

The excess of loss reinsurance arrangements is
particularly advantageous for various classes of
Miscellaneous Accident Insurance involving liability
insurances.

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