What is excess of loss reinsurance in insurance?
Excess of loss reinsurance is a type of reinsurance in which the reinsurer indemnifies–or compensates–the ceding company for losses that exceed a specified limit. Depending on the language of the contract, excess of loss reinsurance can apply to either all loss events during the policy period or losses in aggregate.
How does excess of loss insurance work?
Excess of Loss insurance provides a business with additional cover above their primary liability policy, providing protection from major incidents that could erode their primary insurance.
What does xol mean insurance?
Excess of Loss
XOL – Excess of Loss.
What is an excess loss agreement?
Excess of loss reinsurance is a non-proportional form of reinsurance. In an excess of loss contract, the reinsurer agrees to pay the total amount of losses or a certain percentage of losses above a certain limit to the cedent.
What is the difference between excess and reinsurance?
Excess insurance covers specific amounts beyond the limits in the primary policy. Reinsurance is when insurers pass a portion of their policies onto other insurers to reduce the financial cost in the event a claim is paid out.
What is the difference between surplus and excess of loss reinsurance?
Surplus share agreements allow the primary insurer to cede a certain percentage of liabilities exceeding a pre-determined retention. Excess of Loss Reinsurance: The reinsurer agrees to indemnify the primary insurer for all losses exceeding a specified retention either on a per loss basis or an aggregate loss basis.
What is a reinsurance limit?
Limit — the total amount of losses to be paid under an insurance policy or reinsurance agreement, expressed either on a per occurrence basis (e.g., per accident or event) or on an aggregate basis (e.g., all losses under a single policy, or for all policies during an underwriting period).
What is the difference between excess of loss and surplus reinsurance?
Surplus share agreements allow the primary insurer to cede a certain percentage of liabilities exceeding a pre-determined retention. Aggregate excess of loss reinsurance agreements stipulate that the reinsurer will pay ALL primary insurer losses that exceed a specified retention during the contract period.
What does excess mean in insurance terms?
Insurance excess is the defined amount you agree to pay towards any claim you make. It applies to general insurance products such as motor, travel, pet, health and home cover, but not life policies.
What is the difference between stop loss and excess of loss reinsurance?
A stop loss is a type of non-proportional reinsurance, just like the excess of loss. A stop loss reinsurance provides reinsurance coverage when the total amount of claims incurred during a specific period (usually one year), exceeds either a loss ratio, either in excess which is a specified amount up to a limit.
What is risk excess of loss?
Risk excess of loss is a type of reinsurance that is given to an insurer to protect against a single loss or risk incurred at a specified amount. Risk excess of loss insurance is used when the primary insurer wants to limit his loss per risk or policy.
What is aggregate excess of loss?
The re-insurer pays when the ceding company’s aggregate net losses exceed a predetermined amount or proportion of premium income. For example, reinsurance covers 90% of losses in excess of a 70% loss ratio.
What is excess per risk reinsurance?
Excess Per Risk Reinsurance. Definition. Indemnifies the ceding company against the amount excess of the specified retention with respect to each risk involved in each occurrence. This coverage is written subject to a specified limit and is generally used in property lines.
What is specific excess reinsurance?
Specific excess reinsurance (also called excess of loss insurance) is coverage that the reinsurer is responsible for covering in the event that the amount of a claim exceeds the limit imposed by the insurer (the ceding company). Depending on the agreement, the ceding company may also share the excess with the reinsurer.
What is catastrophe excess reinsurance?
Catastrophe excess reinsurance is a type of reinsurance in which the reinsurer indemnifies-or compensates-the ceding company for losses stemming from multiple claims occurring simultaneously. Natural disasters, for instance, may cause damage to a large number of insured properties in an insurer’s portfolio of policies all at once.
What is property per risk excess of loss?
Per Risk Excess Reinsurance – also known as specific, working layer, or underlying excess of loss reinsurance. A method by which an insurer may recover losses on an individual risk in excess of a specific per risk retention. Has both property and casualty applications.