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Ultimate gross loss ratio higher than ultimate net loss ratio

B

biggs85

Member
If the ultimate gross loss ratio is higher than the ultimate net loss ratio for a line of business and the difference is large, does that imply that the company is buying too much reinsurance? What are other ways of interpreting this?
 
No, it doesn't imply this - quite the contrary. If the net ULR is much less than the gross ULR, then the company is making a lot of reinsurance recoveries for the RI premium that it has paid. I'd say it has bought its RI pretty well!
 
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