How is reinsurance reinstatement premium calculated?
Thereof, how is reinstatement premium calculated?
Example 3 (Calculation of Reinstatement Premiums)
- Reinstatement Premium = (Subject Premium) x (Loading Factor) x (XL Loss Load / Layer) x Date Factor.
- The date factor in the above formula is determined by the calculation method for the reinstatement premium.
- However, if the calculation method is Pro Rata Temporis the date factor is calculated as follows:
Beside above, what is reinstatement premium in reinsurance?
Definition. Reinstatement Premium — a prorated insurance or reinsurance premium charged for the reinstatement of the amount of a primary policy or reinsurance coverage limit that has been reduced or exhausted by loss payments under such coverages.
Excess of loss reinsurance is a type of reinsurance in which the reinsurer indemnifies the ceding company for losses that exceed a specified limit. Excess of loss reinsurance is a form of non-proportional reinsurance.