Specific Excess Reinsurance

What Does Specific Excess Reinsurance Mean?

Specific excess reinsurance, also known as excess of loss insurance, provides coverage for claims that exceed the insurer’s (ceding company’s) predetermined limit. In such cases, the reinsurer is responsible for covering the excess amount. Depending on the terms of the agreement, the ceding company may share a portion of the excess liability with the reinsurer.

Insuranceopedia Explains Specific Excess Reinsurance

Specific excess reinsurance transfers the financial burden to the reinsurer once the amount involved in covering a loss exceeds the limit set by the ceding company.

For example, if the limit is $100,000 and the claim amounts to $110,000, the reinsurer will cover the excess $10,000. However, the ceding company may also be required to share in the payment of the excess, depending on the terms of their agreement with the reinsurer.