Hi Team, I am going through the Reinsurance chapter but there's something which is stuck in my mind. As per my understanding, Excess of loss (XOL) and Individual surplus is same thing like Reinsurance is done for the above retention limit. Then how come the Reinsurance premium is different under both the cases. Could you please explain with example. Also, please correct me if I am wrong when I say XOL and Individual surplus is same.
Hi Mahima Ye Hi Mahima Yes, individual excess of loss and individual surplus could look the same for SP2. This is because the sum assured is a fixed amount. However it is possible that the premiums are calculated in different ways if an original terms basis is used for individual surplus and/or if reinsurance commission is paid. Best wishes Mark
Hi Mark, Thanks for the response. I have one additional query. Could you please confirm if it is safe to say that under individual surplus amount of claims is predefined but under XOL this amount could be of unknown amount until the actual claim occurs. Given that XOL is not generally used for individual contracts and used for group contracts mostly. However, Individual surplus is for individual policies where reinsured benefits is defined.
