excess of loss reinsurance

Excess of loss reinsurance is a type of insurance for insurance companies. It helps protect them from very large claims by covering losses that exceed a certainamount, called the deductible or attachment point. For example, if an insurer faces a claim over that limit, the reinsurance kicks in to pay a portion or all of the excess amount. This arrangement limits the insurer’s risk from big, unexpected losses, ensuring they stay financially stable and can continue to provide coverage even after severe events.