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An insurance company arrange Excess of loss reinsurance treaty three layers as follows :- insurance company's priority ( retention ) = 500,000?

First excess of loss treaty limit = five hundred thousands in excess of five hundred thousands

2nd Ex.loss treaty limit = one million and five hundred thousands in excess of one million

3rd excess of loss treaty limit = two million and five hundred thousands in excess of two million and five hundred thousands

The insurance company underwrite a risk with total sum insured ten million.

   Reinsurer XXY participate with seventy percent share across the board plus hundred percent facultative share covering the amount that exceeding the treaty capacity .

 H ow much will the Reinsurer XXY pay for a total loss claim amounted ten million

Thanking you.

Wish you happy new year.

 

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Question added by Mamoun elbaghir abdalla mhamad Eltayeb , Insurance agent / Producer , Albaraka Insurance Company
Date Posted: 2018/12/10
Mamoun elbaghir abdalla mhamad Eltayeb
by Mamoun elbaghir abdalla mhamad Eltayeb , Insurance agent / Producer , Albaraka Insurance Company

 Total treaty capacity = 5, 000 , 000.

 Total amount of claim under excess loss treaty = 5 , 000 , 000

cedent (insurance company) share in claim = 500,000

excess loss treaty's layers shares will be as follows :-

First excess loss treaty share in claim =     500 , 000

2nd excess loss treaty share in claim   = 1 , 500 ,000

3rd excess loss treaty share in claim   = 2 , 500 ,000

Total treaty (first ,2nd and 3rd) share = 4 , 500 , 000

Reinsurer 's  XXY   share in the claim 70 %        = 3 , 150 , 000

Surplus placed facultatively 5 , 000 , 000

Reinsurer's XXY facultative share in claim 100% = 5 , 000 , 000

Reinsurer XXY Total payment in claim will be      = 8 , 150 , 000

Very best wishes and Happy New Year.

 

 

 

 

 

first excess loss

Ashraf E. Mahmoud (PhD)
by Ashraf E. Mahmoud (PhD) , University Lecturer, Freelancer Consultant and Trainer for Int'l Business & Banking TF. , FreeLancer

Thanks for invitation,

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