PlumBot: Bot: Creating new article from JSON

2026-03-12T00:14:49Z

Bot: Creating new article from JSON

New page

📋 '''Per-risk excess of loss reinsurance''' is a [[Definition:Non-proportional reinsurance | non-proportional reinsurance]] treaty that protects a [[Definition:Cedent | ceding insurer]] against large losses on any single insured risk — an individual building, a specific [[Definition:Commercial insurance | commercial]] account, or a discrete unit of exposure — rather than against aggregate event-level losses. It is the workhorse treaty for [[Definition:Property insurance | property insurers]] writing diverse portfolios where a single large [[Definition:Claim | claim]] could disproportionately impact the book's profitability, and it sits alongside [[Definition:Per-occurrence excess of loss reinsurance | per-occurrence excess of loss]] and [[Definition:Aggregate excess of loss reinsurance | aggregate excess of loss]] as one of the three pillars of excess of loss reinsurance.

⚙️ Under this structure, the ceding company sets a [[Definition:Retention | retention]] — say, $5 million per risk — and the [[Definition:Reinsurer | reinsurer]] covers the portion of any individual risk loss that exceeds that threshold, up to a contractual [[Definition:Policy limit | limit]]. If a warehouse insured for $20 million suffers a total loss, the cedent retains the first $5 million and recovers up to $15 million from the treaty. Crucially, the definition of a "risk" must be carefully delineated in the contract: in property lines, this typically corresponds to a single location or a group of contiguous structures, but ambiguity can arise when multiple locations share common ownership or when a single fire spreads across policy boundaries. [[Definition:Underwriting guidelines | Underwriting guidelines]] and [[Definition:Clash cover | clash cover]] provisions address scenarios where one event damages multiple risks simultaneously.

💡 Per-risk excess of loss reinsurance gives primary insurers the confidence to write larger individual accounts than their own capital would otherwise permit. A mid-sized regional carrier, for example, can compete for a $50 million industrial risk by retaining a manageable slice and ceding the rest, effectively leveling the playing field against bigger competitors. [[Definition:Reinsurance broker | Reinsurance brokers]] often structure these treaties in multiple layers to optimize cost and coverage breadth. The pricing reflects the cedent's historical [[Definition:Loss experience | loss experience]], the risk profile of the underlying book, and prevailing [[Definition:Reinsurance market cycle | market conditions]]. For carriers focused on commercial and specialty lines, this treaty form is not optional — it is the structural backbone that makes large-line underwriting economically viable.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Excess of loss reinsurance]]
* [[Definition:Per-occurrence excess of loss reinsurance]]
* [[Definition:Retention]]
* [[Definition:Clash cover]]
* [[Definition:Non-proportional reinsurance]]
* [[Definition:Facultative reinsurance]]
{{Div col end}}

Definition:Per-risk excess of loss reinsurance - Revision history

PlumBot: Bot: Creating new article from JSON