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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 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.”

Excess of Loss Ratio Reinsurance

A form of reinsurance also known as “aggregate excess of loss reinsurance” under which a reinsurer, subject to a specified limit, is liable for all losses, regardless of size, that occur after a specified loss ratio or total dollar amount of losses has been reached. See Aggregate Excess of Loss Reinsurance, Stop Loss Reinsurance.

Excess of loss ratio reinsurance/stop loss reinsurance

An adaptation of an excess of loss reinsurance treaty. The loss ratio of the cedant is ‘stopped’ at an agreed percentage of the premium income with the balance wholly or partly falling to the reinsurer, e.g. 90 per cent of losses in excess of 80 per cent up to 120 per cent or a given monetary amount if occurring sooner. Aggregate excess of loss reinsurance works in the same way but its entry/exit points are monetary amounts not ratios.

Excess of Loss Reinsurance

Generic term describing Reinsurance which subject to a specified limit, indemnifies the Ceding Insurer for amounts of loss in excess of specified retentions. (ii) Reinsurance which indemnifies the Ceding Company for the portion of any loss resulting from a single occurrence, however defined, that exceeds a predetermined amount, which is known as a first loss retention or deductible.