Measuring the Adjustable Features of Treaties

Appendices A and B present practical approaches to pricing the expected impact of adjustable features and loss sharing provisions of reinsurance treaties. A simple quota share example is used to illustrate methods of estimating the impact of aggregate deductibles, loss ratio caps and loss corridor provisions. This example is then used to evaluate profit and sliding scale commission plans and a retrospective rating plan. Appendix C presents models used to assess the cash flow implications of alternative adjustable features under consideration in an excess-of-loss example.