By covering excessive losses, an excess reinsurance policy gives the insurer that has withdrawn greater security for its capital and solvency. It can also provide more stability if unusual or major events occur. Risk (or overwork) of losses: A surplus can be tolerated when reinsurers expect individual risk losses to affect a given stratum. When reinsurers expect a high frequency of losses, these positions are called overwork. The excess risk of loss contracts generally includes the provision of “ultimate net loss for each individual loss, each risk” and would be subject to the insured`s definition of “every risk” for the purposes of the reinsurance contract. In the event of cancellation, but not declared (IBNR): an addition calculated to allow losses that could have occurred, but which have yet to be reported to the insurer or reinsurer. Based on carefully selected criteria, sophisticated mathematical and actuarial models have been developed to further analyze the possible development of an entire portfolio of known paid and outstanding losses and to project this known experiment into a likely position of endless loss. The difference between known and projected figures is called the IBNR factor. IBNR is assessed on the basis of an entire portfolio of losses and not on the basis of individual losses, as in IBNER above.
Loss counting model: the period from the initial estimate of the outstanding loss reserve for a partial offset receivable and adjustments to the balance of the remaining losses until the full and final payment of that debt. Risk that can lead to loss. The insured risk is the subject of the insurance contract. Ceding`s premium revenues were US$10,000,000 and the total loss of $8,000,000 during the year. Ultimate net loss – The total amount that the insured or any business must pay as an insurer or both, either by adjudication or compromise, generally includes hospital, physician and burial expenses and all amounts paid in the form of salaries, salaries, allowances, legal fees, fees and fees, seizure or claims premiums, interest, expenses for doctors, lawyers , nurses and other people. , and for disputes, settlement, rectification and investigation of claims and claims that are paid as a result of insured damages, except for the salaries of insured employees or employees of the insurer. Annual aggregate limit: an alternative description of the maximum horizontal (or lateral) coverage available as part of a surplus of contracts-loss over an annual period. The initial loss, plus 3 complete reintroductions, offers a maximum of 4 total losses that are repayable over one year from this surplus contract. The annual limit value of the aggregate would therefore be four times the individual layer limit. Found rights and losses discovered: It turns out that there are specific forms of insurance coverage.
The rights or losses found mean that reinsurers are only responsible for all claims reported during the actual reinsurance coverage period. There is no “tail,” as it is for other types of excess reinsurance coverage. This coverage is preferred by insurers and reinsurers for product liability, errors and omissions and other similar business liability activities. In the mini-glossary (week 3.2) you will find some of the most important terms used in the cover of “Claims Made”. Excess reinsurance may also work a little differently. Instead of requiring the reinsurer to be responsible for all losses on a certain amount, the contract may instead indicate that the reinsurer is responsible for a percentage of losses above that threshold.