Identify three types of excess of loss reinsurance.
(1) Per Risk Excess of Loss. Per risk XL treaty is created to protect individual risk on an excess of loss basis. This type of XL reinsurance is also called as working cover.
(2) Per Event Excess of Loss. The most common one of this type is ‘Catastrophe Excess of Loss’, which subject to a specific limit, indemnifies the ceding company in excess of a specified retention with respect to an accumulation of losses resulting from a single catastrophic event.
(3) Aggregation Excess of Loss Reinsurance. This type protects primary insurer from losses that occur during aspecified period that exceed either a certain dollar amount or a specified loss ratio.