Explain how a per occurrence limit in a per risk XL treaty would limit the usefulness of the treaty in responding to cat. losses.
Usually after a catastrophe event,there will be many claims with huge compensation of every property at the same time.Reinsurers under the form of per risk XL need a restriction to differ from the XL per occurrence. Other wise the XL per risk would limit the usefulness of the XL per occurrence, and reinsurers will face serious financial problems.
Per occurrence limit limits an extent of loss per accident and is often stated as 2-4 multiples of the per risk limit. So if the total loss of every property in one loss event is higher than the event limit, the excess part will be the responsibility of the ceding company itself.