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Insurance purchased by an insurer to transfer part of its own insured risk to another insurer.
A proportional arrangement shares an agreed part of covered premiums and losses. An excess-of-loss arrangement instead responds above a stated retention, up to its limit. Contracts may cover a single risk or a portfolio and can include exclusions and event definitions. Reinsurance therefore does not mean every claim cost passes to another company or that the original insurer has no remaining exposure.
Imagine an insurer with a hypothetical catastrophe contract covering J$80 million of qualifying losses above a J$20 million retention. A covered J$70 million event would leave J$20 million with the insurer and J$50 million recoverable from the reinsurer, ignoring other terms. A J$120 million event would exceed the layer: the insurer retains the first J$20 million and another J$20 million above its J$80 million limit.
Jamaican insurers report J$54.35 billion in Melissa payments; 983 claims remain