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🛡️ '''Casualty excess of loss reinsurance''' is a form of [[Definition:Non-proportional reinsurance | non-proportional reinsurance]] that protects a [[Definition:Ceding company | ceding company]] against individual or aggregated [[Definition:Casualty insurance | casualty]] losses that exceed a predetermined [[Definition:Retention | retention]] level. Unlike [[Definition:Proportional reinsurance | proportional treaties]], where premiums and losses are shared according to a fixed ratio, casualty excess of loss contracts only respond once a loss — or accumulation of losses — breaches the agreed threshold, known as the [[Definition:Attachment point | attachment point]]. The coverage typically sits above the insurer's retained layer and extends up to a defined [[Definition:Reinsurance limit | limit]], shielding the cedant from the severe tail risk inherent in liability lines such as [[Definition:General liability insurance | general liability]], [[Definition:Workers' compensation insurance | workers' compensation]], [[Definition:Professional liability insurance | professional liability]], and [[Definition:Motor liability insurance | motor third-party liability]].

⚙️ A casualty excess of loss programme is structured in layers, each with its own attachment point and limit, and often placed across multiple [[Definition:Reinsurer | reinsurers]] to diversify counterparty exposure. Per-occurrence excess of loss covers respond to individual loss events — say, a catastrophic workplace accident or a mass tort verdict — while [[Definition:Aggregate excess of loss reinsurance | aggregate excess of loss]] covers trigger when the cedant's cumulative losses over a treaty period surpass a specified annual aggregate retention. Pricing depends on loss development patterns unique to casualty classes, which tend to be [[Definition:Long-tail insurance | long-tail]] in nature: claims from product liability, environmental pollution, or professional negligence can take years or even decades to emerge and settle. This latency compels [[Definition:Actuary | actuaries]] and [[Definition:Underwriter | underwriters]] on both sides to rely heavily on [[Definition:Loss development factor | loss development factors]], historical [[Definition:Loss triangle | triangles]], and scenario analysis, making casualty excess of loss among the most technically demanding areas of [[Definition:Reinsurance | reinsurance]] pricing.

📊 The strategic importance of casualty excess of loss reinsurance cannot be overstated for insurers writing liability-heavy portfolios. It enables [[Definition:Primary insurer | primary insurers]] to write larger policies and enter volatile casualty segments while keeping their [[Definition:Net retention | net retained exposure]] within acceptable capital boundaries. Regulators globally — from the [[Definition:National Association of Insurance Commissioners (NAIC) | NAIC]] framework in the United States to [[Definition:Solvency II | Solvency II]] in Europe and [[Definition:C-ROSS | C-ROSS]] in China — recognize qualifying reinsurance as a tool for capital relief, though the degree of credit permitted varies by jurisdiction and depends on factors like [[Definition:Collateral | collateralization]] and reinsurer credit quality. In the [[Definition:Lloyd's of London | Lloyd's]] market, casualty excess of loss is a staple of [[Definition:Syndicate | syndicate]] [[Definition:Reinsurance programme | reinsurance programmes]], and global [[Definition:Reinsurance broker | reinsurance brokers]] play a central role in structuring and placing these treaties during renewal seasons.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Non-proportional reinsurance]]
* [[Definition:Aggregate excess of loss reinsurance]]
* [[Definition:Property catastrophe excess of loss reinsurance]]
* [[Definition:Long-tail insurance]]
* [[Definition:Attachment point]]
* [[Definition:Loss development factor]]
{{Div col end}}

Definition:Casualty excess of loss reinsurance - Revision history

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