Surplus Reinsurance
A form of proportional reinsurance where the amount of risk ceded to the reinsurer is based on a formula which takes into account:The size and/or classification of each overall risk;
An initial amount that the insurer retains of each risk – the insurers retention (amounts below this are retained 100% by the insurer);
The amount that the reinsurer will accept above the retention. This is usually based on the total sum insured and/or an estimate of the maximum loss, and the amount of the insurers retention.