PlumBot: Bot: Creating new article from JSON

2026-03-16T08:54:06Z

Bot: Creating new article from JSON

New page

📋 '''Per occurrence excess of loss''' is a [[Definition:Reinsurance | reinsurance]] structure in which the [[Definition:Reinsurer | reinsurer]] indemnifies the [[Definition:Ceding company | ceding company]] for the portion of loss from a single [[Definition:Occurrence definition | occurrence]] that exceeds a specified [[Definition:Retention | retention]] (also called the [[Definition:Attachment point | attachment point]]), up to a defined limit. It is one of the most widely used forms of [[Definition:Excess of loss reinsurance | excess of loss reinsurance]], providing protection against the severity of individual events rather than the cumulative frequency of losses over time. This structure is central to [[Definition:Catastrophe excess of loss | catastrophe reinsurance]] programs as well as per-event casualty protections across every major insurance market.

⚙️ A per occurrence excess of loss treaty is structured in layers, each with its own attachment point and limit. For example, a cedent might retain the first $10 million of any occurrence and purchase reinsurance that covers $15 million in excess of $10 million — meaning the reinsurer pays for losses between $10 million and $25 million attributable to a single event. Multiple layers can be stacked to extend protection further, with different reinsurers participating at different levels of the tower. When a qualifying occurrence produces aggregate losses that breach the retention, the cedent files a claim against the applicable layer. The [[Definition:Occurrence definition | occurrence definition]] and any [[Definition:Hours clause | hours clause]] embedded in the treaty determine how individual losses from a widespread event — such as a hurricane or earthquake — are grouped into a single occurrence for purposes of calculating recovery. [[Definition:Reinstatement premium | Reinstatement]] provisions typically apply, allowing the cedent to restore exhausted limits after a loss by paying an additional premium.

💡 Per occurrence excess of loss treaties are indispensable for managing peak exposures. They protect an insurer's balance sheet against outsized single-event losses that could otherwise impair [[Definition:Regulatory capital | solvency]], and they do so without requiring the cedent to share premium and profit on every risk in the portfolio, as a [[Definition:Proportional reinsurance | proportional treaty]] would. Pricing these treaties demands rigorous [[Definition:Catastrophe modeling | catastrophe modeling]] and [[Definition:Actuarial analysis | actuarial analysis]], incorporating factors such as historical [[Definition:Loss experience | loss experience]], modeled [[Definition:Probable maximum loss (PML) | probable maximum loss]] scenarios, and the cedent's geographic and line-of-business concentrations. Regulatory regimes around the world — [[Definition:Solvency II | Solvency II]] in Europe, the [[Definition:Risk-based capital (RBC) | RBC]] framework in the United States, and [[Definition:C-ROSS | C-ROSS]] in China among them — grant capital credit for qualifying per occurrence excess of loss protections, reinforcing their strategic value in enterprise-level [[Definition:Capital management | capital optimization]].

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Excess of loss reinsurance]]
* [[Definition:Catastrophe excess of loss]]
* [[Definition:Per risk excess of loss]]
* [[Definition:Attachment point]]
* [[Definition:Retention]]
* [[Definition:Paid reinstatement]]
{{Div col end}}

Definition:Per occurrence excess of loss - Revision history

PlumBot: Bot: Creating new article from JSON