Allocation of Claims Under Reinsurance

Free SOA Exam FAM (Fundamentals of Actuarial Mathematics) lesson in Short-Term Insurance and Reinsurance Coverages. 12 min read, ~1,800 words.

Per-risk XOL has three cases: below retention (cedant pays all), within layer (reinsurer pays excess over retention), above layer (reinsurer pays full limit, excess falls to cedant). Top of the layer is, the retention plus the limit, not the limit alone. A \$400K claim under 300K xs 150K recovers \$250K...