• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

Reinsurance

Mahima Singla

Active Member
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 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

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.
 
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