Does stop Loss cover only the policies that are written already at the time the reinsurance treaty is entered into? If not, then if the insurer writes policies after signing the treaty at intentionally low rates, then although it will be generating more premium income and hence increasing the excess limit and the upper point, but the increase will not be sufficient enough as the rates have been reduced and so the reinsurer will be at a disadvantage as the excess point is more likely to be breached than before. How does writing stop Loss with limits defined in terms of percentages help here then?
Last edited: Feb 12, 2020