Question

What is ultimate net loss in non-proportional reinsurance?

The net loss after recoveries from all other reinsurances

The net loss after deducting salaries of employees and office costs of the insurer

The net loss after recoveries from proportional reinsurers, salvage, subrogation and contribution

The net loss after excluding survey reports, assessor’s fees, salvage costs, legal costs, and interest

Posted under IC85 Reinsurance Management

Answer: (d).The net loss after excluding survey reports, assessor’s fees, salvage costs, legal costs, and interest Explanation:Ultimate net loss in non-proportional reinsurance is defined as the amount that has to be protected, which exceeds the net retained loss after recoveries from all other reinsurances and before the excess of loss reinsurer becomes interested. The amount of the ultimate net loss consists not only of all sums paid in respect of the claim but also all expenditure incurred by the insurer in connection with the claim, such as survey reports, assessor’s fees, salvage costs, legal costs, interest, etc. However, salaries of employees and office costs of the insurer are not included in the calculation of the claims' costs. Recoveries from proportional reinsurers, salvage, subrogation, and contribution are deducted from the claims' costs.

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Q. What is ultimate net loss in non-proportional reinsurance?

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