Page 180 - Reinsurance Management IC85

The Insurance Times

vii) Stop loss - or excess of loss ratio. The
reinsurer covers loss incurred by reinsured when
the annual loss ratio of a particular portfolio
exceeds an agreed percentage of earned premium.
The reinsurer will limit maximum pay out either
by a monetary limit of by further percentage of
loss ratio.

Eg: to cover losses in excess of a loss ratio of 90%
up to a loss ratio of 120%

viii) Reinstatement - reinstatement clause determines
the number of times the contract can incur losses.
By paying an extra premium the cover can be
reinstated back to the proportion of loss suffered. The
purpose of the clause to limit maximum times the
treaty can be made to pay for looses.

Eg. If the reinstatement clause limit the reinstatement
to 4 times that means the contract will cover for 5
total losses.

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