While reinsurance arrangements are frequently utilized by property and casualty insurance companies to mitigate the effects of catastrophic losses, life and health insurance carriers historically have been less likely to employ reinsurance tools. In the post healthcare reform market, health insurance companies may benefit from acquiring reinsurance coverage. Most notably, the elimination of individual lifetime maximums creates new exposures for health insurers never seen before. This article demonstrates the difference between different types of reinsurance arrangements and how they may potentially be utilized by health insurance carriers—most notably Excess of Loss Reinsurance.

Pro Rata vs. Excess of Loss Reinsurance | MyNewMarkets.com