Page 47 - Reinsurance Management IC85

The Insurance Times

Stop Loss reinsurance is a form of protection
which makes it possible to limit the loss ratio to
an agreed percentage. If in any one year, the loss
ratio exceeds the agreed percentage, reinsurers pay
to limit the ratio to the agreed percentage.

For example, a stop loss contract may cover 90%
of the amount in excess of a 70% loss ratio upto
a further 50%. This means that reinsurers are liable
for 90% of all claims after the loss ratio of the
company has reached 70% and until the loss ratio
has reached 120%. It is also usual to limit the
reinsurers' liability to a fixed amount.

b. Reporting Excess of Loss Cover:
This is usual in marine risks. Each risk is reported
to the reinsurers and the sum in excess of the
agreed point advised. The premium is calculated
on agreed rate to original net premium plus 100%
of war premium and for cargo any overage
additional premium.

c. Covers with aggregate deductible:

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