Catastrophe Reinsurance
Excess of loss protection against event losses piercing a retention across many policies at once.
Overview
A program might sit 400 million in limits part of 250 million, meaning the reinsurer pays when one event net loss crosses 250 million, with layers stacked above and reinstatement provisions restoring limits after use for additional premium. Pricing follows modeled expected loss from vendors such as Verisk and Moody's RMS. Rates on line spiked after Andrew in 1992, Katrina in 2005, and the 2017 hurricane triple, then softened between events, the classic underwriting cycle. Catastrophe bonds and sidecars feed the same layers with collateralized capital, and public funds such as the Florida Hurricane Catastrophe Fund add state capacity. Climate tail risk keeps models and pricing under continuous pressure.
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