How much potential loss would taunton college retain

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Reference no: EM132751794

Captive Insurance

The Risk Manager at Taunton College dreams a big dream that one day Taunton College will have its own captive insurance company. The main driving force behind this dream is that Taunton College would be in control of its insurance destiny. The Risk Manager envisions the following plan: (C) Taunton College establishes a single-parent captive insurance company and uses the captive to cover losses arising from its workers compensation loss exposures, up to a $2 million per occurrence. (D) The insurance arrangement between Taunton College and the fronting company is an incurred loss retrospective rating plan with a loss limit of $100,000 per occurrence for its workers compensation loss exposures. (E) Taunton College's captive insurance company then re-insures the fronting company on the same retrospectively rated basis. The captive insurer then purchases excess of loss reinsurance of $1,000,000 for any loss in excess of $1,000,000 per occurrence.

Determining Net Loss Exposure Per Occurrence

Problem 1: How much potential loss would Taunton College retain per occurrence?

Problem 2: What is the captive insurer's net loss exposure per occurrence?

Problem 3: What is the maximum the captive's reinsurer would pay for any loss?

Reference no: EM132751794

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