One Reply to “is there any maximum limit which a re-insurer will pay to insurance company?”

  1. It all depends upon the treaty agreement that is negotiated between the insurer and the re-insurer.

    It is conceivable that an insurer would transfer 100% of the risk but it is not likely. Essentially all of the premium collected by the primary insurer would have to go to the re-insurer to pay for the transfer of the risk.

    In most cases the insurer would negotiate a reinsurance agreement where the primary insurer retains a large part of the risk and the re-insurer would not payout until a certain amount of claims was paid out by the primary insurer.

    The re-insurance payout could be structured in different ways. The agreement could pay if a single occurrence exceeds a certain dollar amount (proportional) or it could pay out only if there are several occurrences that exceed a specified dollar amount (excess of loss)…

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