Allocation of Claims Under Reinsurance

Free SOA Exam FAM (Fundamentals of Actuarial Mathematics) lesson in Short-Term Insurance and Reinsurance Coverages. 8 min read, ~1,214 words.

Per-risk XOL: three cases, below retention (cedant pays all), within layer (reinsurer pays excess), above layer (reinsurer pays full limit, excess falls to cedant). Multiple layers stack: Layer 1 fills first, then Layer 2. Excess above top layer returns to cedant. Quota share + XOL order matters: QS first shrinks...