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.

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.

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.

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.

An excess of loss reinsurance where the reinsured’s retention and the reinsurer’s limit of liability apply to losses arising from a single occurrence regardless of the number risks or policies involved. This approach may be applied to both liability and property insurances.

In excess of loss reinsurance, the insurer fixes a point up to which he will retain losses for his own account (his retention). This is the excess point as losses above this level will be payable wholly or partly by the reinsurer up to a limit, the second excess point.

Standardised instruments that are bought and sold on a recognised exchange such as the London International Financial Futures and Options Exchange (LIFFE) which launched LIFFE weather futures products, a standardised weather derivative contract, in 2001. These overthe-counter contracts are available to weather-sensitive companies wishing to hedge against the weather risk.

Exclusion of a particular form or type of loss rather than a risk, e.g. fire damage to property undergoing a heating process is excluded. The risk of further damage is not excluded as the insurer will be liable for damage caused by the fire as it spreads. A public liability policy excludes liability for damage to property the insured is working on but does not exclude losses that flow from the initial damage.