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📊 '''Aggregation''' refers to the accumulation of multiple individual [[Definition:Risk | risks]] or [[Definition:Loss | losses]] that arise from a single event or share a common cause, treated collectively for the purposes of [[Definition:Underwriting | underwriting]], [[Definition:Reinsurance | reinsurance]], or [[Definition:Claims management | claims management]]. In insurance, the concept is central to understanding how a single catastrophe — a hurricane, a cyberattack affecting thousands of policyholders, or a widespread product defect — can transform numerous small exposures into one enormous liability. Insurers and [[Definition:Reinsurer | reinsurers]] must identify and measure aggregation to ensure that their [[Definition:Portfolio | portfolios]] do not harbor hidden concentrations of correlated risk.

⚙️ Carriers typically manage aggregation through dedicated [[Definition:Exposure management | exposure management]] tools and [[Definition:Catastrophe model | catastrophe models]] that simulate how individual policies might respond simultaneously to a shared event. When a [[Definition:Reinsurance treaty | reinsurance treaty]] is structured, the definition of what constitutes a single aggregated event — and where the boundaries fall — directly determines how [[Definition:Retention | retentions]] and [[Definition:Reinsurance limit | limits]] apply. For example, a [[Definition:Property catastrophe excess-of-loss reinsurance | property catastrophe excess-of-loss]] contract will specify hours clauses or geographic zones that dictate which losses can be bundled together as one occurrence for recovery purposes.

💡 Failure to account for aggregation has historically produced some of the insurance industry's most painful surprises. The asbestos and environmental liability crises of the late twentieth century demonstrated how thousands of policies, written across decades and lines of business, could aggregate into sector-wide losses far beyond anyone's original projections. Today, [[Definition:Cyber insurance | cyber insurance]] presents a modern parallel: a single vulnerability exploited across millions of systems could trigger correlated [[Definition:Claim | claims]] on an unprecedented scale. Sound aggregation analysis is therefore not merely a technical exercise — it is a strategic imperative that shapes [[Definition:Capital adequacy | capital adequacy]], [[Definition:Pricing | pricing]], and the long-term solvency of carriers and reinsurers alike.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Aggregation clause]]
* [[Definition:Catastrophe model]]
* [[Definition:Exposure management]]
* [[Definition:Accumulation risk]]
* [[Definition:Reinsurance]]
* [[Definition:Probable maximum loss (PML)]]
{{Div col end}}

Definition:Aggregation - Revision history

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