What is the definition of Excess of Loss Reinsurance?

Excess of Loss Reinsurance refers to the agreement between an insurance company and a reinsurer.

The insurance company passes on some of the risk it agrees to cover to a reinsurer. The insurance company then agrees to pay a portion of a claim while the reinsurer will pay a portion or the entire claim amount in excess of the amount paid by the insurance company.

For example, an insurance company writes an automobile liability policy for $200,000. The insurance company retains the first $50,000 on any one risk. The insurance company then buys excess of loss reinsurance for $30,000 in excess of $50,000 on any one risk. When there is a claim for $100,000, the insurance company pays $50,000 and that reinsurer pays $30,000.

• Reinstatement
• Registered Principal
• Liquor Liability
• Businessowners Policy (BOP)
• Directors and Officers Liability Insurance