Question

What is the purpose of Catastrophe Excess of Loss (Cat XL) reinsurance?

a.

To limit losses that arise on the reinsured’s day-to-day operations

b.

To provide protection against number of losses that arise out of a single accident, occurrence or event

c.

To protect a reinsured against an accumulation or aggregation of losses arising from an identified event

d.

To provide protection against adverse underwriting results of proportional treaties

Posted under IC85 Reinsurance Management

Answer: (c).To protect a reinsured against an accumulation or aggregation of losses arising from an identified event Explanation:Catastrophe Excess of Loss (Cat XL) reinsurance protects a reinsured against an accumulation or aggregation of losses arising from an identified event such as earthquake, flood, cyclone, riots, etc., which may affect a large number of risks. Such accumulations or aggregation may far exceed the reinsured’s retention on an “any one risk” basis.

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Q. What is the purpose of Catastrophe Excess of Loss (Cat XL) reinsurance?
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