Reinsurance Pricing Calculator
Price excess-of-loss reinsurance layers with technical premium, risk load, brokerage, and rate on line calculations.
Inputs
$
$
$
Results
Total Premium
$969,118.00
≈ 23 Teslas
Rate on Line (%)
9.69%
Technical Premium$766,101.00
Risk Load Amount$114,915.00
Brokerage Amount$88,102.00
Payback Period (years)10.3
How to Use This Calculator
- Enter the cedant's expected loss distribution or aggregate loss statistics.
- Set the reinsurance attachment point and limit.
- Input a risk load factor.
- Review the expected reinsurance loss cost and the loaded reinsurance premium.
- Compare the rate-on-line to market benchmarks from recent treaty placements.
How the result changes with Expected Loss
| Expected Loss | Total Premium | Rate on Line (%) |
|---|---|---|
| $1,000,000,000.00 | $12,462,786.00 | 124.63% |
| $3,500,000,000.00 | $12,595,994.00 | 125.96% |
| $6,500,000,000.00 | $12,620,869.00 | 126.21% |
| $9,000,000,000.00 | $12,628,948.00 | 126.29% |
What each input means
- Expected Loss
- Expected annual loss for the reinsurance layer
- Attachment Point
- Dollar amount where the reinsurance layer begins (retention)
- Layer Limit
- Maximum coverage provided by the reinsurance layer
- Risk Load (%)
- Percentage markup for uncertainty and profit (typically 10-25%)
- Brokerage (%)
- Reinsurance broker commission percentage
How this is calculated
Worked example, using the default values
- Define the reinsurance layerLayer = Attachment xs Limit$5,000,000 xs $10,000,000 (exhaustion at $15,000,000) = Layer: $5,000,000 to $15,000,000
- Calculate LEV at attachment and exhaustionLEV(d) = (θ/(α−1)) × [1 − (θ/(θ+d))^(α−1)]LEV(5,000,000) = $1,861,910, LEV(15,000,000) = $2,628,011 = Layer factor = 38.31%
- Compute technical premium (expected ceded loss)Technical Premium = LEV(A+L) − LEV(A)$2,628,011 − $1,861,910 = $766,101
- Apply risk loadRisk Load = Technical Premium × Risk Load %$766,101 × 15% = $114,915
- Apply brokerageBrokerage = (Technical + Risk Load) × Brokerage %$881,016 × 10% = $88,102
- Total premium and rate on lineRate on Line = Total Premium / Limit × 100$969,118 / $10,000,000 = 9.69% ROL, 10.3 yr payback
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