Question

What distinguishes catastrophe reinsurance from stop loss reinsurance?

a.

Catastrophe reinsurance pays out for individual risks, while stop loss reinsurance pays aggregate losses for a portfolio.

b.

Catastrophe reinsurance has no predefined threshold, while stop loss reinsurance has a predetermined retention.

c.

Catastrophe reinsurance pays for losses exceeding a predetermined retention, while stop loss reinsurance pays for losses from catastrophic events.

d.

Catastrophe reinsurance caps the portfolio's loss for a given time period, while stop loss reinsurance pays for losses from catastrophic events.

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (a).Catastrophe reinsurance pays out for individual risks, while stop loss reinsurance pays aggregate losses for a portfolio. Explanation:Catastrophe reinsurance pays out for individual risks defined in the contract, while stop loss reinsurance pays aggregate losses for a portfolio over a given time period.

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Q. What distinguishes catastrophe reinsurance from stop loss reinsurance?
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