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surplus level.

Example: Retention 1st 2nd 3rd
Insured Surplus Surplus Surplus
Sum 5 Lines 10 Lines 10 Lines
Nil Nil Nil
Rs. 5,00,000 Rs. 5, 00,000 Rs.25,00,000 Rs.45,00,000 Nil
Rs. 75,00,000 Rs.5,00,000 Rs.25,00,000 Rs.50,00,000 Rs.47,00,000
Rs. 127,00,000 Rs.5,00,000

It was pointed out above that the retention of
the ceding insurer is a limit for his maximum
retention. The insurer may decide that he does
not wish to retain the full amount on a particular
risk (in the above example he may decide to
retain only Rs. 4,00,000 instead of the maximum
limit of Rs. 5,00,000). The surplus ould then be
recalculated and ceded over the three treaties
as appropriate.

b) As with proportional treaties, there must be a
definite method for determining which claim falls
within the scope of the excess of loss treaty. The

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