Excess of Loss Explanation

Aug 5, 2016

  1. Milkman
    Offline

    Milkman New Member

    Posts:
    1
    Likes Received:
    0
    Hello everybody,

    I am quiet new in Insurance market and want to understand excess of loss reinsurance.
    For example, first layer is 1m in excess of 2 m. So if the loss is 1,5m, then reinsurer will pay only 0,5 and insurer 1m, yes?

    Another example. There are two layers. First is 1m in excess of 2m. While the second is 3m in excess of 5m. So if the loss is 4m, how much does reinsurer pay? 2m according the first layer or 1m according the second layer?

    Can, someone, explain this to me? I will be really grateful.
     
    Milkman, Aug 5, 2016
    #1
  2. INSUREGEEK
    Offline

    INSUREGEEK Super Genius

    Posts:
    233
    Likes Received:
    17
    State:
    Ohio
    I am assuming you are talking occurrence limits here.

    1X of 2M Primary Per Occurrence?? Primary pays the 1.5 loss......

    You have a major problem on your 2nd scenario:
    2M primary per occurrence = 2M paid
    1X of 2M Primary - you have 3M covered by now
    next layer is 3X of 5???? You have a 2M gap in layers because you haven't made it to 5M yet, just 3M.

    Let me know if that doesn't make sense. .
     
Loading...