#25a: 10-10 rule
In 25a, why is there only a 5% of reinsurer incurring a loss? If the reinsurer is paying "all ceded losses in entirety", wouldn't a 5M claim be >10% U/W loss too? Thanks!
It looks like you're new here. If you want to get involved, click one of these buttons!
In 25a, why is there only a 5% of reinsurer incurring a loss? If the reinsurer is paying "all ceded losses in entirety", wouldn't a 5M claim be >10% U/W loss too? Thanks!
Comments
Never mind, I misunderstood the question
I don't seem to understand something about this question. I don't see a retention amount or quota share percentage. If all losses are ceded, then I also think 5M would be above the 10% threshold if the premium for contract is only 10M. Can someone help clarify this question for me?
Edit: Does U/W Loss mean net of premium? Then the answer makes sense.
"Underwriting loss" does mean max(0, loss less premium). The 10-10 rule is interested in this amount.