Excess of loss ratio reinsurance where the excess point is recalculated annually as a moving average of the loss ratio experienced over an agreed number of preceding years and the ceding company is required to bear an agreed share of any loss in excess of that average.
Insurance Encyclopedia
Excess of average loss reinsurance
A form of excess of loss ratio reinsurance. The excess point is recalculated each year as a moving average of the loss ratio experienced over an agreed number of preceding years. The ceding office agrees to bear an agreed share of any loss in excess of that average.
Excess of Line
The marine insurance equivalent of surplus reinsurance.
Excess of line reinsurance
The marine insurance equivalent of surplus reinsurance. As a rule the retention is based on a table of limits graded according to the class of the carrying vessel. Retentions are based on total sums insured and not estimated maximum loss (EMLs) as in fire insurance.
Excess of loss
UK: a form of non-proportional reinsurance under which the reinsurer agrees to indemnify the cedant for losses in excess of a specified amount (the cedant’s retention), either in respect of each risk or for claims in aggregate arising from a particular occurrence.
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A form of reinsurance under which recoveries are available when a given loss exceeds the cedant’s retention defined in the agreement.
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A type of reinsurance that covers specified losses incurred by the reassured in excess of a stated amount (the excess) up to a higher amount, for example £5 million excess of £1 million. An excess of loss reinsurance is a form of non-proportional reinsurance.
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US: The reinsurance limit attaches above a per occurrence or aggregate limit.
Excess of loss cover
Aircraft fleets can be insured on the basis that the deductible is so large that the owner is virtually his own insurer except for very large losses. The schemes can take a variety of forms, e.g. (a) the insurer paying if the claims arising from any one accident exceed a figure that is an appreciable percentage of the value of the aircraft; (b) similarly, but the excess is a percentage of the total value of the fleet; (c) the insurer paying only losses which, taken over the whole fleet during the course of the year, exceed a certain percentage of the value of the fleet.
Excess of Loss Cover to Protect an Excess of Loss Portfolio
A Company may have in its books an inward Reinsurance portfolio of excess of loss covers involving not only considerable limits of liability on individual covers accepted, but also inevitable accumulation of liability, in that a number of such covers may be affected by a single event. An excess of loss protection may be arranged to limit such accumulations to a definite figure in respect of any one event.
Excess of Loss Policy
A policy that covers claims only to the extent that they exceed a stated amount.
Excess of loss ratio
See: stop loss.
Excess of Loss Ratio (Aggregate Excess of Loss Reinsurance)
Excess of loss Reinsurance that indemnifies the Ceding Insurer against the amount by which its losses incurred during a specific period, usually twelve months, exceed either (i) a predetermined rupee amount, or (ii) a percentage of the Insurer’s premium for that period. Commonly referred to as “stop loss Reinsurance” or “excess of loss ratio Reinsurance.”