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Total treaty capacity =10,000,000
Insurance company retention =30%
Reinsurance company share =70%
The insurance company cover and protect it's retention by Excess loss treaty layer2,000,000 in excess of1,000,000
Then , the insurance company was requested to pay for two claims
claim (A) amount10,000,000
claim (B) amount6,000,000
The question
-
How will be the split of the amounts of these two claims between the insurance company retentions and the reinsurer shares.
With my best wishes
claim (A) amount10,000,000
Insurer's retention : SR 3 MLN
XOL TTY Layer : SR 2 MLN in excess of 1 MLN
Insurer's net claim retention : 3 MLN - 2 MLN = 1 MLN
claim (B) amount 6,000,000
Insurer's retention : SR 1.8 MLN
XOL TTY Layer : SR 800K in excess of 1 MLN
Insurer's net claim retention : 1.8 MLN - 800K = 1 MLN
Claim A of 10,000,000
Retention will be 3 Million and Qs Treaty Share will be 7 Million. Out of retention XOL Ttreaty will further pay 2 Million. Keeping Net Retained loss at 1 Million.
Claim B - 6,000,000
Here Retention will be 1.8 Million and QS Treaty will pay 4.20 Million. Out of the Retention XOL treaty will pay 800,000 keeping Net Net Retention as 1 Million.
The split of the total amount of claim (A) will be as follows :-
total amount of claim =10,0000,000
the insurance company retention30% =3,000,000
of which the excess loss treaty reinsurer's share =2,000,000
insurance company share will be =1,000,000 after excess loss protection .
quota share treaty reinsurer's share =7,000,000
The split of the total amount of claim (B) will be as follows :-
total amount of claim =6,000,000
the insurance company retention30% =1,800,000
of which the excess loss treaty reinsurer's share =800,000
insurance company share will be1,000,000 after the excess loss protection.
qouta share treaty reinsurer's share =4,200,000
Thanking you .
