Insurance Coverage and Excess-of-Loss Per Risk Treaty Explained
What is the retention limit of Apex Health Insurance?
A. $50,000
B. $75,000
C. $100,000
D. $150,000
How does Geneva Re participate in covering losses for Apex Health?
A. Through a proportional treaty
B. By paying all losses exceeding $100,000
C. By covering losses up to $1 million
D. None of the above
Answer:
The retention limit of Apex Health Insurance is $100,000. Geneva Re participates in covering losses for Apex Health by paying all losses exceeding $100,000 up to a maximum of $1 million.
Insurance coverage can be a complex topic, especially when it comes to setting limits and agreements between insurance companies. In the case of Apex Health Insurance, they have a retention limit of $100,000 for a single policy. This means that Apex Health will cover any losses up to $100,000 on their own.
To protect against losses exceeding this limit, Apex Health enters into an excess-of-loss per risk treaty with Geneva Re. Geneva Re agrees to pay all losses exceeding $100,000 but only up to a maximum of $1 million of the sum insured. This arrangement helps Apex Health limit their liability in case of high losses.
Understanding how insurance coverage works, including excess-of-loss treaties, can help businesses manage risks effectively and ensure financial stability in times of unforeseen circumstances.