Non-proportional reinsurance agreements, also known as “excess of loss” reinsurance, require the reinsurer to only pay out if the claims suffered by the insurer exceed a stated amount. This amount is called a “retention” or “priority.”
Also known as excess of loss reinsurance. Losses excess of the ceding company’s retention limit are paid by the reinsurer, up to a maximum limit. Reinsurance premium is calculated independently of the premium charged to the insured. The reinsurance is frequently placed in layers. Contracts may be continuous or for a specific term.
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