An Actuarial Model of Excess of Policy Limits Losses

Excess of policy limits (XPL) losses is a phenomenon that pre­sents challenges for the practicing actuary. This paper proposes using a classic actuarial framework of frequency and severity, modified to address the unique challenge of XPL. The result is an integrated model of XPL losses together with non­XPL losses. A modification of the classic actuarial framework can provide a suitable basis for the modeling of XPL losses and for the pricing of the XPL loss component of reinsurance contracts.