Term Of The Day – Stop Loss Reinsurance
Protects a cedent against an aggregate amount of claims over a period, in excess of a specified percentage of the earned premium income. Stop loss reinsurance:
- Does not cover individual claims therefore it is bulk insurance.
- The reinsuer’s liability is limited to a stipulated percentage of the loss and/or a maximum dollar amount.
- Protects the cedent against the possibility that the aggregate value of an accumulation of small losses will exceed a specified percentage of earned premium income of a particular class.
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