Page 178 - Reinsurance Management IC85

The Insurance Times

in a single contract. Thus a coverage for a total
of $5,000,000 may be placed as:-
1st Layer Up to $200,000 in excess of $50,000
2nd Layer Up to $750,000 in excess of $250,000
3rd Layer Up to $4,000,000 in excess of $1,000,000

Different reinsurers will probably be involved with
each layer and each layer will be rated individually.
The construction of the layering is often dependent
upon market conditions.

iii) Original conditions -
a) Conditions of reinsurance treaty will be same
as original policy.
b) Premium will be at same rate as received by
insurance company.
c) Does not apply to insurance company's
financial losses and reinsurer is only liable
for its share of losses only.

iv) PML - Probable maximum loss. It is maximum
loss an insurance company will bear in case of an

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